Ali Hasan
Introduction – Dream11 is an Indian fantasy sports platform that allows users to play fantasy sports. These sports include cricket, hockey, football, kabaddi and basketball. It was co-founded in 2008 by Harsh Jain and Bhavit Sheth and is headquartered in Mumbai, India.
In 2012, they introduced freemium fantasy sports in India for cricket fans. Dream11 was the first Indian gaming company to achieve the Unicorn status. You might have seen their ads where they ask people to make a team on dream11 and win money.
But many questions are still unanswered such as:-
- Is this business model legal?
- Will they achieve profitability?
- How can you make money on dream11?
We will answer all these questions but first a little background.
Early Days – Harsh Jain completed his engineering from the University of Pennsylvania and his MBA from Columbia Business School. Other co-founder Bhavit Sheth has a Bachelor of Engineering degree from D.J. Sanghvi College in Mumbai and an MBA from Bentley University (Boston). He also holds a Diploma in E-commerce strategies from Harvard.
They both collaborated together to start dream11.
The early days were full of ups and downs. They faced a lot of struggles and were rejected by more than 150 investors. They faced a legal issue where their business model was considered illegal.
They also faced a lot of difficulties in raising funds and took about 7 years to secure the 1st round of funding. They also pivoted many times before finally deciding on their current business model.
Marketing Strategy – Cricketer Mahendra Singh Dhoni is the brand ambassador of Dream11 and launched the “Dimaag se Dhoni” media campaign during the 2018 IPL. The company had first signed commentator Harsha Bhogle as their brand ambassador in 2017.
For 2019 IPL, Dream11 signed up 7 cricketers and partnered with 7 IPL franchise as part of its multi-channel marketing campaign. The Board of Control for Cricket in India (BCCI) announced that Dream11 has replaced Vivo as the title sponsor for the 2020 IPL, which was held in the UAE from September to November.
Dream11 was already among the many sponsors of the IPL, and won the title sponsorship rights with a bid of Rs 222 crore for a four-and-a-half-month deal.
They launched a marketing campaign during IPL 2020 where they encouraged more and more people to make a team on dream11 and participate in the fantasy league. Their ads went viral and a tagline was used in every ad “Ye mai kar leta hu, aap dream11 par team bana lo”.
User Base & Valuation – In 2014, the company reported 1 million registered users, which grew to 2 million in 2016 and to 45 million in 2018. In 2020, they have more than 80 million users.
Since India’s fantasy gaming market is expected to grow at a compound annual growth rate (CAGR) of 28%, dream11 user base will also increase. The total market size will grow to $1.6 billion by 2022.
They have officially become a unicorn. Hence, they have a valuation of more than $1 billion but after fresh round of funding, their valuation might increase to $2.5 billion.
Funding – Dream11 has received a total of $385 million in funding over 6 rounds from 6 lead investors. They have a total of 8 investors. Their latest round of funding was held in September 2020.
The investors are as follows:-
- Tiger Global Management
- Chrys Capital
- Footpath Ventures
- TPG
- Steadview Capital
- Tencent Holdings
- Kalaari Capital
Revenues & Losses – Since anyone could play the game for free when it was launched the only source of revenue was by playing ads.
Later dream11 shifted to a freemium model and players could still play for free but if they wanted to earn money, then they needed to pay a registration fees. 80-85% users play for free in dream11.
In 2019, Dream11 reported total income of Rs 801.7 Cr ($112.4 Million) in FY19, which is 251.9% higher than the Rs 227.8 Cr ($33.3 Million) revenue it earned in FY18.
However, it is yet to turn profitable (as per last disclosed financials), since it had a total expense of Rs 934.8 Cr ($131 Million) in FY19. A whopping 84% of the total expenses (Rs 785.1 Cr) were for advertising and promotion.
This means they are spending as much to acquire users than it earns from them, with other major costs also coming into play. Employee benefit expense also grew by 150.4% from the previous year, reaching Rs 66.4 Cr.
Acquisitions & Tie-ups – Dream11 is in talks to acquire Bengaluru-based e-sports platform SoStronk. Founded by Prashant Prabhakar and Karan Mishra in 2016, it is a tech enabler in the e-sports industry. It has B2C as well as B2B segments.
Dream11 has recently acquired an AI driven fantasy sports startup named Fanduniya. It was founded in 2018 which offers its users the most comprehensive news coverage, statistical tools and AI based models to make accurate, informed and wise decisions in a fantasy cricket match.
Dream11 has tied up with ICC, Pro Kabaddi League and International Hockey Federation to expand their reach. They started with cricket but now you can play football, hockey, kabaddi, baseball and basketball as well.
Controversies – The biggest controversy for them was that the game was deemed illegal but was allowed after a court gave judgment in their favor and stated that it’s not gambling.
But even then dream11 is still banned in the states of Assam, Odisha and Telangana as they don’t allow sports fantasy league.
Their app isn’t available on Google Play Store as it violates their policy. Hence, you have to directly download the app from their website.
Future Goals – Dream11 plans to invest in the e-sports ecosystem over next 2 years. From coaching to sports analytics, they are going to invest heavily in the grassroots sports development.
Their aim is to help build the e-sports ecosystem by providing capital to initiatives and knowledge in digital to help them expand aggressively. Through this, they will build the ecosystem from bottoms up.
These are the future plans of dream11 stated by Harsh Jain.
The Big Question – Now we will answer the big questions which are as follows:-
- Is this business model legal? – Yes, it’s completely legal after a court gave judgment in their favor.
- Will they achieve profitability? – Yes, Dream11 has shown tremendous growth during 2020 and will achieve profitability if they can hook people into playing fantasy sports league.
- How can you make money on dream11? – You simply have to pay a registration fees and start playing by selecting your dream 11 team. If your selected players play well in the real game, you’ll earn points. The total points will get converted into money. 20% of the money will be kept by Dream11 and the rest 80% of the money will be distributed among the top players.
