Thursday, July 25, 2024

How Does Dream11 Make Money? Business Model of Dream11

In this blog post, let’s understand the business model of dream11 and how dream11 makes money and the lessons you can learn from Dream11 business. The business model of dream11 is quite simple, easy to understand and it is a great business model.

Gambling is illegal but dream11 has made it legal by bringing gambling completely online. For almost 7 years, dream11 was not able to raise their funds and more than 150 investors have rejected them but they never lost their faith and kept working hard. 

Today the valuation of dream11 is more than $1B. Even Tencent has invested $100M at a valuation of $1B.

And in 2020 they are the title sponsors of the Indian premier league as well and they got this deal for 222 crores and they will continue to be the title sponsors of Dream11 till 2022 if Vivo does not return in 2021.

Dream11 has a tie-up with major governing bodies such as International Cricket Council, Pro kabaddi League, International Hockey Federation, and many others.

Business Model Of Dream11

Let’s understand the business model of dream11 with an example. Have a look at the below image in which the entry fee for the league is 299 and there are 4 spots available and the person who comes in the first position will get 1000 and the other 3 will get nothing. 

dream11 revenue model

So here each person will be investing 299 to enter the league and the sum total of 4 people will cost 1196 and the winning amount for the first person is 1000. Therefore Rs.196 is the profit for Dream11 and that’s how dream11 makes money. Simple revenue model, isn’t it?

Lessons To Learn From The Business Of Dream11

Dream11 was founded by Harsh Jain and it has never been easy for him to make dream11 a successful business. He had made many mistakes and had struggles in between. Let’s look into it.

Don’t Start A Company Just For The Purpose Of Business

Harsh Jain who had done his engineering in the USA and when he was in the USA, he had a great interest in playing fantasy games and his favorite sport was football. These fantasy games are very popular and common outside India but in India, it wasn’t there and nobody knew about it.

So when IPL had started in 2008, Harsh Jain realized that in India everyone is a cricket expert. He discussed it with his friends and understood that there is a lot of demand for this in India too. So with the help of his friend Bhavit Seth, he launched Dream11.

But one mistake he did was, he copied the same business model that used to be successful in other countries. But unfortunately, that didn’t work. 

When dream11 started in 2008, it could be played for free and the competition was for the whole season i.e a whole IPL season, and when the season ends the winners will be decided and their main revenue source was through ads. They thought this free model would work great but No!, that didn’t go well as they had planned.

Then they realized Indians require low commitment and they won’t play it for the whole season, so they decided to get results after every match and they shifted from the Ad revenue model to the freemium model where people can play for free and if you want to earn money then you must pay a registration/entry fee. After adopting this, their business slowly started to grow.

Never Include Thousands Of Features

One of the major mistakes done by Harsh Jain is that he included too many features in the platform. They have added trivia, live scores, blogs, and added many other casual games as well for the people who are not interested in fantasy games and this was their biggest mistake. 

Because as a startup you need to focus only on one topic and try to solve it and once it is scaled then you can concentrate on expanding to other areas.

In 2011,they removed all other features and concentrated only on fantasy games and there was a consistent growth after that.

Never Give Up

They had lots of problems in getting funding to their business and nobody really showed great interest in investing with them. 

It was not even possible to decide whether dream11 was legal or illegal to operate and google never allowed to add fantasy applications in their play store and the users had to download the apk file which gives a warning.

And to convince the users about these warnings wasn’t an easy task. But they stick to their goals and finally were able to raise the Series A funding in 2015 after 7 years of starting dream11.

In 2017, a case was registered against dream11 as it is considered gambling and should be banned. But the court rejected the case, saying it isn’t gambling as it is not won on the basis of luck but rather you need skills, knowledge, judgment, attention, and many more. So the court considered fantasy games as legal.

Growth Of Dream11

2014: 1 Million registered users

2016: 2 Million registered users

2018: 45 Million registered users

2020: 70 Million registered users

The growth of dream11 in 2020 is huge and it will keep growing rapidly in the coming years. Dhoni being the brand ambassador of Dream11 has been a massive boost to their business success.

And their recent advertisement has even made the general public to promote dream11 which says “ Yeh mein kar leta hun yar, aap jaake dream11 pe dream banao”. Hope you have heard it and it’s being used everywhere these days. That’s how you make an advertisement so that even the public starts promoting your product everywhere!!

Ending Thoughts

Dream11 is still in loss, but the growth they are having is in the next level. Starting a business is not easy, is it? You need to go through all the hurdles to be successful. If we can apply all these lessons of dream11 in our lives, we can also grow and reach greater heights.

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