Hotbox Hopes to Turn Fantasy Sports Into Real Profits

U.S. Company Bets Focus on Basketball Will Score Big Points With Chinese Game Players

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Hotbox is putting an early focus on basketball in China.
Hotbox is putting an early focus on basketball in China.

NEW YORK ( -- Fantasy sports have taken the U.S. by storm, burgeoning into a $1.5 billion industry with 27.7 million participants, and one company is betting it can do the same in China and other global markets by focusing on the non-football fantasy games that have failed to gain traction in the U.S.

New Jersey-based Hotbox Sports recently cut a deal to become the first and only U.S. fantasy sports company to operate an officially licensed Chinese-language fantasy-sports site. The company signed a deal with a local partner, FTXGame, which will build, host and market Hotbox's platform in China.

Hotbox is putting an early focus on basketball in China, where "NBA" was the 10th most searched term on Google last year and more than 200 million people tuned in to watch countrymen Yao Ming and Yi Jianlian square off in an NBA contest last year.

"The Chinese public is obviously obsessed with NBA basketball," said Hotbox CEO Tarek Bahou. "If [American] football can sustain 27 million users here, we don't see why it shouldn't be able to sustain 54 million there."

But, other than comparing relative populations, there's little research to prove that hunch thus far.

Paul Charchian, president of the Fantasy Sports Trade Association, the industry's leading trade group, said attempts at polling the Chinese market have yet to provide useful data about the potential for fantasy sports there. "The language barrier, the newness of the product, the huge spectrum in terms of technology and lifestyle, these all make it really hard," he said. "Generally speaking, we know it's growing, but getting good data has been tough."

Mr. Charchian did note, however, that the last six months have seen a "significant uptick" in requests for information from the FSTA from would-be fantasy-sports operators in other countries, a sign that Hotbox isn't the only outfit assuming the category has potential beyond the U.S. And Hotbox says it is "exploring opportunities" in Scandinavia, Latin America, Japan and Italy.

Whether basketball is the right bet, however, remains to be seen, because the sport's performance has been anemic in the U.S.

While football has drawn in 75% of the 27.7 million fantasy players in the U.S., basketball has only attracted 22%, less than baseball (40%) and even auto racing (31%).

Mr. Charchian said basketball and baseball leagues have been set back by the every-day nature of their sports, which require fantasy players to keep up daily. (Football, by contrast, is mostly played on Sundays, which makes it easier for players to keep up and also to build social activities around games.)

While a fantasy football game is generally decided on Sunday (although some contests linger into Monday night), fantasy basketball games typically linger on for an entire week, with each NBA player taking the courts as many as four times before a game is decided.

Mr. Bahou sees two problems with this: It's boring and predictable, because the law of averages tends to prevail over a four-game period. "If you are playing against Kobe Bryant, you might beat him in one game, but you're probably not going to beat him over four," notes Mr. Bahou.

So Hotbox's format splits each week into two three-day periods, and it allows each owner to activate each player for just a single game in each period, creating a more football-like "one player, one game" dynamic.

But the hardest-core users tend also to be the most engaged: The average Hotbox user loads 42 different pages within the site each time he visits. That's the sort of engagement that has sent marketers like MillerCoors and others scrambling into fantasy football stateside.

Mr. Bahou and his team -- which also includes Ryan Berger, son of Euro RSCG North American Chairman Ron Berger, as chief marketing officer -- are betting the Chinese market has more than enough basketball die hards to support such a model. Thus far, they've got 50,000 Chinese users.

Hotbox is also rolling out a soccer product that attempts to tackle the issue that has long stymied fantasy-soccer efforts: Soccer is so low scoring that few players compile the statistics necessary for fantasy sports. His solution: Let users draft players from the five largest global soccer leagues, greatly increasing the number of stars -- and stats -- available to participants.

"Soccer is the world's most popular sport," he notes. "So how is fantasy soccer still smaller than fantasy bass fishing?"

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