From the perspective of the contest provider, there are numerous things to consider when you’re piecing together the makeup of your flagship tournament (clearly). Jon Warner and I went through a lot of these considerations last season during the promotional BB+ offering (as those of you who followed our journey last season might remember, Jon and I worked together to build a contest provider platform in 2020, taking an idea to beta together), but we’ll review some of the biggest considerations here.
It’s no secret that contests with a large prize to first place attracts participants. That said, contest providers must be extremely careful when designing a contest as the entire prize pool, per jurisdictional law in a game classified as a game of skill (and not gambling), must be guaranteed prior to launch. As in, the contest provider is on the hook for any overlay that could develop. That is a big part of the reason why we’ve seen larger and larger contests throughout the four-year journey of UD as a company. This is the same reason why we see the DFS contests offered on the major sites (DraftKings and FanDuel) ebb and flow. If a contest overlays, we see the guaranteed money in that contest in subsequent weeks drop down.
Once a contest provider platform achieves a prescribed number of unique users, they must begin to account for player retention and a healthy ecosystem. Think about it logically – without organic growth and the recirculation of player funds, the player pool dries up and the provider cannot offer the same guarantees because players simply withdraw their funds or, worse yet, are unable to continue to deposit. This is likely a large reason why we are seeing so much more of the prize pool allocated to regular season prizes in BBMIV.
In last year’s contest, BBMIII, 75,201 prizes were paid out – the 75,200 entries that advanced out of their draft and the one player to win the regular season prize of $1,000,000. That equated to 75,201 of 451,200 total entries, or 16.67 percent. This year, BBMIV is paying out 122,896 prizes in a contest with 677,376 total entries for 18.14 percent. The higher percentage of entries paid out will benefit the ecosystem of their platform and increase player retention. Now, this is but one contest amongst the myriad of contest offerings from UD this year, but the snapshot into the decision-making process behind the change in format makes sense from the perspective of running a healthy business.
What we don’t get to see are the business numbers behind running a contest provider. Things like cost of player acquisition (new users, typically leveraged through advertising costs versus rate of acquisition), player retention (the lifespan of a user on the platform), and repeat customers (guys and gals that deposit multiple times) fundamentally influence decisions made and the course of a provider.
Yes, UD has spun the changing dynamics of their flagship contest using the reasoning that it continues to force its users to evolve to varying structures (which could be true, to an extent), but I can confidently speculate that it has more to do with the evolution of their userbase than placating a specific demographic of users.
That said, the new format does seem like a solid compromise between what the top one percent of its users likely crave (although I can all but guarantee the top one percent users do not like the payout structure of the playoff rounds, as you have all probably noticed from the Twitter-sphere, with the prizes lacking depth and being too steep) and what is most optimal for its newest users. But again, that matters not at this point – what matters is that we have an entirely new contest, with a new set of governing rules, that every entry must abide by and optimize for. Speaking of optimization, what the hell are we even optimizing for? Expected value, my friends.