Catch The Wave [Of The Future]

Did DraftKings discover the next big thing in sports betting, or will subscription services be the start of the next intra-industry fight?

We live in a world of monthly subscriptions. Amazon Prime, Netflix, Spotify, Substacks (like this one), legacy media, subscription boxes, Factor/Hello Fresh, fitness memberships, you name it, we subscribe to it.

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DraftKings’ new subscription service, Sportsbook+, has been compared to various other subscription products, with some fitting better than others.

Many subscription services lock access (in whole or part) behind a subscription paywall and are not good comps. One I’ve seen a few times is Planet Fitness, which has some similarities, but beyond the price(sensitivity) point, I think that connection falls short.

The best analogies are services like Amazon Prime or YouTube Premium, where all users can still access and use the core functionalities of the product without a subscription.

Prime and YouTube Premium offer non-subscription versions that are nearly indistinguishable the paid product. You can’t work out at Planet Fitness without a membership, but you can go on YouTube without a YouTube Premium subscription. You just have to deal with ads. You can also purchase everything a Prime member can on Amazon, but you don’t get free shipping. Both offer other benefits, but the cause célèbre that gets people to sign up is the lack of ads and free shipping.

Sportsbook+ doesn’t have a roped-off VIP area; it provides an "enhancement layer" over the basic service. It’s like having a 10% membership discount to the museum’s gift shop. Anyone can walk in and buy whatever they want, but you get a little discount.

Not One, Not Two, But Three Target Customers

For DraftKings’ Sportsbook+, the selling point is simple: Bet more parlays and save more money. Many customers are already placing enough parlay bets that a $20/month subscription makes perfect sense. And bonus (for DraftKings): They might bet even more!

Eilers & Krejcik Gaming (a newsletter sponsor) is leaning positive about the subscription service, noting that “Amazon Prime members in the United States spend $1,400 per year on Amazon, while non-Prime members spend $600 per year.”

DraftKings is also likely banking on Sportsbook+ enticing customers who use multiple apps to shift more of their spend to DraftKings to get full value from their subscription.

Allan Stone, the co-founder of Acquire.bet spoke to this aspect in a LinkedIn post:

“The average North American bettor has 4 betting apps on their phone, but DraftKings just solved sports betting's biggest loyalty problem. They know they're sharing screen time with FanDuel, BetMGM, and Fanatics. So, they launched parlay boost subscriptions.”

Stone believes this will keep a customer on the DraftKings app: “When you're paying for boosts, you're going to place your parlays where you're getting that value.”

“They [DraftKings] know they can't replace the other apps, Stone said. “They're simply trying to capture more of the bettor's spend.”

Finally, EKG believes the bigger question “is whether subscriptions help to more efficiently monetize that very long tail of low-to-no-value customers that make up the bulk of a sportsbook’s database.”

Like Planet Fitness (the price-sensitivity argument), DraftKings hopes some customers will sign up and rarely use the betting boosts.

Getting value out of inactive customers would change the sports betting industry forever.