Yahoo! Sports Revenue Is Fantasy, But It’s A Good Thing

Yahoo! Sports Revenue Is Fantasy, But It’s A Good Thing
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The day after it was revealed that Yahoo! Inc. (NASDAQ:YHOO) sites overtook Google Inc (NASDAQ:GOOG)’s sites for traffic in the U.S., Citi analysts say investors have another reason to cheer. They say Fantasy Football season provides great opportunities for the company to receive a major revenue boost this year, and they’ve noticed signs that the company has realized it.

Yahoo! Sports Revenue Is Fantasy, But It’s A Good Thing

Yahoo!’s sports property generate millions

Analysts Mark May, Kevin Allen and Nathaniel Brogadir report that their contacts suggest Yahoo! Inc. (NASDAQ:YHOO)’s sports property alone generates between $100 million and $200 million in annual revenue. They said about 60 percent of that revenue comes from the search giant’s fantasy sports franchise.

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The analysts also note that they’ve “heard and seen numerous ads” which focus on Yahoo’s fantasy sports. They said this “more significant marketing push” could mean that Yahoo sees sports as an important part of its turnaround, especially as it pushes its services toward mobile.

IBISWorld estimates that Americans spend more than $1 billion every year on fantasy sports. NFL-based fantasy football makes up more than 36 percent of that amount. Also growth adds up to about 10 to 12 percent every year.

Bonuses for Yahoo in fantasy sports

They point out that advertising and sponsorships on fantasy sports websites like Yahoo “are one of the largest drivers of industry revenue.” This is important for Yahoo! Inc. (NASDAQ:YHOO) because sports advertisers are usually among the largest in the industry.

Also growth in the fantasy sports industry will likely be driven by mobile apps, which is where Yahoo is focusing a lot of its efforts. If the company can strengthen its fantasy sports business through mobile apps, then this could provide a boost for the other parts of its mobile business.

Can Yahoo increase its market share in sports?

The analysts said Yahoo’s iOS Fantasy Football app has a four-star rating, which indicates that fans do enjoy using it. In addition, they said Yahoo! Inc. (NASDAQ:YHOO) stands to gain a lot if it can tap into the more than 35 million North American fantasy sports players estimated by the Fantasy Sports Trade Association. If the company can increase its market share in this one area, then it could cross market its other services to them to introduce their new services.

They also believe that strength in mobile fantasy sports could provide a boost to any future efforts the company may have in interactive or connected television.

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