From Startup to Success: The Rise of Dream11 in the Indian Gaming Industry and the Ethical Issues it Raises
Since the commencement of the Indian Premier League (IPL), the Indian business ecosystem has been pouring in thousands of crores into sponsorships. It’s common for businesses like Pepsi or Tata to invest hundreds of millions of dollars to sponsor the IPL, but in 2020 it was astounding to see a 12-year-old startup named Dream11 (whose application was not present on Google play store until September 2022),
won the sponsorship bid of the IPL for an astonishing amount of ₹ 222 crores.
Since then, Dream11 has developed into one of the nation’s fastest-growing sports fantasy platforms, with more than 140 million users as of 2021.
And guess what? Dream Sports is now valued at more than $8 billion and is one of the few consumer-focused startups that has actually turned a profit as of 2020. The company’s sales has already surpassed $2 billion.
The question is: What is this company’s “dream” model, how do they make money despite investing hundreds of millions of rupees in marketing, and most importantly, how did they very ingeniously get around the law that could have prohibited them from operating because they were a gambling establishment?
Well lets see step by step,
What is Dream11?
Dream11 is a fantasy sports app co-founded by Harsh Jain (son of Indian businessman Anand Jain) and Bhavit Sheth in 2008, where you can create your fantasy team based on real-life matches.Dream11 is the first Indian fantasy gaming company to enter the unicorn club. Users of the app Dream11 can create fictitious teams. The caveat is that the users can get paid dependent on how well their teams’ chosen players perform in actual matches. Users receive cash rewards for each successful move made by the players.Dream11 offers its customers the chance to play games including cricket, football, kabaddi, and National Basketball Association(NBA).
The platform currently has a customer base of over 15 Crore users. Dream Sports is a sports technology company whose portfolio includes brands including Dream11, FanCode, DreamX, DreamSetGo, and Dream Pay.
Dream11 — Startup Story
The new fantasy sports market was sparked by the Indian Premier League (IPL). Harsh and Bhavit founded the business in the hope that sports fantasy leagues would develop into a lucrative service niche in a nation with billions of cricket enthusiasts.
Since IPL started, people’s way of watching cricket was completely changed. Where people, used to sit & enjoy cricket full day, now that same fun was possible to be enjoyed in just 3–4 hours which took cricket’s viewership to the sky.
When Harsh Jain returns to India from the US after his studies, he observed and analyzed a critical thing in India that the people who watch cricket are very judgemental and they analise the sport completely.
They often say that,Dhoni should play like this, Kohli should play like this. If they would have played like that then they could have won.etc.
Then Harsh thought ,Why not bring fantasy gaming to India & launch it in cricket?
And this is the moment when the idea of Dream11 started to boom.
Few people are aware that when Dream11 was first founded, the firm was very different from what it is today. This business at the time was entirely dependent on ad revenue. This prevented any growth from occurring.
Not to mention, there was absolutely no chance of making money. Years passed and Harsh continued. The fortune of Dream11 altered when He finally achieved product-market fit in 2012.
Dream11 model And its Revenue mode
Dream11 operates on the “Prize pool commission model”. Everyone who uses their platform to play games must pay an entry fee, and in return, they receive some credits. Now obviously the better the player ,the higher will be the amount that the one has to pay to get the player into his team and this is where strategy comes in.For example if MS Dhoni and Rohit Sharma both have a high dream level price tag.Although one would want to have both of them in his team but he/she wouldn’t be able to do so because he/she would be left with very little money to purchase other players.Another catch we hear is that the person playin the fantasy game can not pick all the 11 players from the same team,at max he can pick 6 members from one team and a minimum of 5 from the other.Note this very very carefully because it’s very important for the discussion
ahead. This competition has entry fees as low as ten rupees but could go all the way up to thousands of rupees. Let’s imagine that Aryan, who is a little dubious, enters the competition with an entry fee of 49 rupees. Just like Aryan, thousands of participants will also enter the competition.Now, dream 11 mostly serves as an organiser for these competitions so that all of these players are classified according to the amount of money they have invested.Let’s say the number of participants is 3 lakh.The first ranker gets the highest amount and from there onwards the amount keeps descending .
And the position of Aryan is determined by how well the players he selected performed in the game and ultimately the number of points his team scores determines how much money he will get. Dream 11 has already established these point systems, so you receive a separate point for each catch, weekend, and number of runs your player achieves. You can view all of these in real time alongside your ranking. And from that point forward, you are powerless to affect the outcome; all you can do is wait and pray that your players do well.
And after that the price money pool that is formed,80–85% of the money is collected by the corporation, which then gives it to participants as prize money.
The remainder, between 15% and 20%, represents the company’s profit.So if the entry fee for a contest is 49 rupees and 3 lakh people enter the contest then the total money collected amounts to 1.47 crores out of which 20 percent is usually dream11’s cut. Regardless of whether you make money or not Dream11 always walks away with a hefty profit.
Gambling Edge
Now, the question is: Isn’t this just like gambling? I mean, even here, users choose a particular player in the hopes that they will perform well, and when they do, these players actually win and, similar to betting, the money of the players placing the bet is left up to chance. Considering that the bet organiser wins automatically, the fact that it appears to be gambling to us, and the reality that gambling is prohibited in the majority of Indian states
How is this business running throughout the nation, not to mention sponsoring the greatest sporting events in India, the IPL?
The answer to this can be found in a case from the Rajasthan High Court, where a man by the name of Chandra Shankara complained that the public was being defrauded by Dream 11, that it amounted to gambling, and that it shouldn’t be permitted in India. However, the rajasthan High Court dismissed the petition by citing decisions from the Punjab, Haryana, and Bombay High Court.The High court said in dismissing the petition that it may be reliably inferred that the outcome of fantasy games is not determined just by chance or accident and that the skill of the player impacts the game’s outcome and has a significant bearing on it.
This was even taken to Supreme court and the outcome was no different.The petitioners argued that fantasy sports businesses like Dream 11 are nothing more than pure gambling and not competitive games of skill. In order to comprehend this claim, however, we must first define what constitutes gambling.
Gambling is frequently described as betting, gaming, or engaging in an activity that is a game of chance rather than a sport of skill in the hopes of winning a larger sum of money or any other prize by risking a little amount of money now. The justification for Dream 11 was that choosing a team of players requires analytical skills, strategy, and historical information of the players; it is not done after knowing the result of the game.You see, guys, when you play dream 11, you aren’t betting on one team alone.(here’s where the feature that we discussed earlier comes into play) The 11 players that you select will be in a 5–6 combination, which means you have to choose six players from one team and five players from the other, or vice versa. The argument over here is that with knowledge of the player’s past performance and on the basis of the record in certain games, a judgement is made based on those factors.
So “legally” Dream11 is not a gambling game. But is it a good to play it regularly ,well I dont think so, we will discuss this further in this blog.
Masterstroke
However, the harm had already been done from a marketing perspective, which presented a difficulty. Even if the verdict was in their favor, as soon as this information surfaced, it was seen as a gambling game. Dream 11 wasn’t even available on Google Play Store’s platform(untill sept 2022)(this is because the play store has strict guidelines on the apps that indulge in gambling directly or indirectlym and Google revised these rules after sept 2022).
So how did Dream 11 restore their reputation after this blemish? Simple they roped in the legend Mahendra Singh Dhoni himself. And when Dhoni endorses a particular brand we all know what is the effect of it. In addition, Dream 11 created a campaign with the slogan “khelo dimag se” that very clearly emphasised the need for strategic thinking.
This is how Dream 11 returned to the game, and along with Dream 11, many other sports fantasy organisations have joined the cricket fever in an effort to profit as much as possible. The valuation of Dream Sports at $8 billion makes it clear where this sector is headed.
Funding and Investors
As of November 25, 2021, Dream11 had amassed close to $1.62 billion in financing from 9 rounds of funding. Falcon Edge, DST Global, D1 Capital, Tiger Global, and Redbird Capital were the leaders of the most recent investment round for Dream11; TPG and Footpath Ventures also took part. This investment round, which began on November 24, 2021, enabled it to raise about $840 million. The Chinese juggernaut Tencent, which contributed $100 million via a Series D funding round in September 2018, is one of the notable investors that have contributed to Dream11’s funding. Many Indian firms, including Practo, Hike, Flipkart, Ola, and Gaana music, had previously received finance from Tencent Holdings, a Chinese international investment firm.
In April 2019, the company received funding from Steadview Capital, becoming a member of the exclusive Indian unicorn club. Huge companies like Kalaari Capital, Chinese digital juggernaut Tencent, Think Investments, and Multiples Equity support Dream11.
According to reports dated September 4, 2021, Sporta Technologies, the parent company of Dream11, is considering a new financing round to raise approximately $12.5 million (roughly Rs 90 crore). Antordaya Commercial and Holdings Private Limited has requested to receive 2,933 equity shares for a total of Rs 90,72,44,359 from Dream11’s parent company at a premium of Rs 3,09,313 per equity share.
Ashneer Grover’s Third Unicorn
Ashneer Grover, the ousted cofounder and MD of BharatPe, is entering the crowded fantasy sports market with his newest company, Third Unicorn, and has already registered a trademark for a fantasy cricket platform named CrickPe. Documents filed with the government’s Trademark Registrar Office showed that CrickPe’s services include, “creating an online community for registered users to participate in the administration of sports competitions and fantasy sports competitions and related operations, voting, auctioning, coaching, play calling, contract negotiations, salary negotiations, player trades and player drafts.”
I personally didn’t like this new venture (why? its discussed below).I was too exited for Ashneer Grover’s new venture when he announced the “third unicorn” but when he launched CrickPe ,I was a lot dissapointed was hoping for a brand new segment and new revolution in the field of Indian entrepreneurship and absolutely Ashneer Grover has the potential to do so.Anywaasy no offence to Ashneer sir and still hoping to get some amazing companies out of the Third unicorn.
According to all indications, Ashneer Grover’s CrickPe would face competition from Indian fantasy sports startups Dream11, MPL, my11circle from Games24x7, and a number of others.
However, given the intense competition in this sector, acquiring customers requires a significant investment in promotion, which has been challenging for startups during the previous few months. For instance, ShareChat terminated its fantasy game service Jeet11, which resulted in the firing of 100 staff members at the social media unicorn.
Given that Grover recently openly advised venture capitalists to stay away from Third Unicorn, stating that the firm would only utilise “desi/self-earned capital,” it is unclear where CrickPe obtains the funding it would obviously require for a larger rollout.
Reality of Dream11
Dream11’s actual product is not their game. Their actual product is EGO, emotional intelligence & the design of everyday things. Human’s biggest hunger is EGO and and to fulfill it, it can cross any limits. Even now, many of us are unaware of this.Half of our labour is done by our ego and let me say this: “In this world, selling ego is the most lucrative industry.”
How does the actual business model for Dream11 operate?
There are two facets to their business plan Winning and Losing.
Take into account that you bet money on Dream11 and that you won.Now,due to the minor accomplishment you have achieved in this situation you’ll become dependent on this.And this addiction develops as a result of your inflated ego following a victory. You play this game again by default.
Let’s examine the second scenario now.
You spend money, play, and lose right now. Now in this instance, as Dream11 has done its marketing in such a way, you need knowledge and abilities to succeed in Dream11.
You’ll stay in this game from now on because you now find this difficult. Your ego has been tested by this game, which you now lose. And you now have the drive to re-play and to re-win.As a result, you begin playing this game once more again.
This game is compelling for two more reasons. “Low entry barrier” is number 1 and the second thing, “High exit Barriers”. You can’t leave the Dream11 platform even if you want to because of one reason,
That reason is the “Sunk cost fallacy”.
Observe its operation. When you first create your squad and play on Dream11,therefore, your time is just as important as your money. If you succeed,your delighted hormones then compel you to play this game once more. However, even if you lose, as you have invested time in playing this game, so to recover that time in terms of money, you play this game again and you continue to play this game.
If someone thinks :Ok so as I have wasted this much time,he would again rethink: Let me invest some more time, who knows I might win.This loop goes on in similar way.
Additionally, to strengthen this,Dream11 has established a withdrawal cap of Rs. 200. So long as you don’t have 200 rupees, you’ll continue to play. You win or lose, company will earn money in every way. And this is one reason,investors are paying so much funding to them.
MY VIEWS
Should I play this game? Well my clear answer is NO.
This game is nothing but buttered up version of gambling in my opinion. There is one thing which people are unable to see, that is time. The time that it consumes, the value of that time is more than the money you earned on that platform. The issue is that many people still place a higher value on money than on time. And by taking advantage of this, these businesses rob us of our time.
And last as quoted in The Bhagavad Gita: Chapter 10, Verse 36
द्यूतं छलयतामस्मि तेजस्तेजस्विनामहम् |
जयोऽस्मि व्यवसायोऽस्मि सत्त्वं सत्त्ववतामहम् || 36||
Translation
BG 10.36: I am the gambling of the cheats and the splendor of the splendid. I am the victory of the victorious, the resolve of the resolute, and the virtue of the virtuous.
We should never indulge in any gambling activity as it just brings misery. The time and resources you’re investing in dream 11 ,if the same resources are put into learning a skill, they will undoubtedly yield much greater rewards, and your chances of gaining a return will rise.
Please feel free to share your thoughts in the comment section. Your suggestions are always welcome.
