fuboTV Plans to Continue Adding Free Channels; Reexamine Sports Betting Business
When fuboTV reported its second-quarter earnings on Thursday, the company revealed that it had shed 109K subscribers to push its user base below 1 million customers. While seasonal churn is to be expected for the sports-focused streamer without football and as the NBA and NHL seasons wind down, the continued decline for Fubo is a concern for company executives.
In a call with analysts after the report was published, co-founder and CEO David Gandler revealed that the live TV streaming service was planning on making a pair of strategic pivots in its business plans in hopes of jump starting its momentum.
The first area of focus that Fubo will be looking at is in the adding of free, ad-supported TV (FAST) channels; something that the streamer has been increasingly doing as of late.
“I think one of the other things that we’ve done quite well is we’re continuing to add fast channels to dilute the number of cable networks in our package to ensure that we’re continuing to increase the amount of ad inventory available,” Gandler said. “So I think overall, this is obviously an area of extreme importance to us. But so far, we’re happy with the deals that we’ve renewed. And we think there’s going to be some value in some of the additional value that we’ve received as part of these deals.”
The rationale for this is two-fold; first, as the CEO mentioned, by adding ad-supported channels, Fubo has the ability to greater control the ad inventory and revenue, something that the company can’t due when it is streaming established linear channels. Second is that the streamer has to pay ever-increasing carriage fees to retransmit the cable channels, and since fuboTV is trying to keep its costs down, it can lead to losing valuable content — especially for sports fans — like TNT and TBS, or it can lead to last-minute deals like the 11th-hour agreement that prevented a carriage disruption of TelevisaUnivision channels last month.
Gandler noted in the call that Fubo had increased its FAST offerings to 40 channels and plans to increase that total to 100 by the end of 2022. Will these free channels be enough to entice consumers to sign into the service? It’s too early to tell, but the market for FAST channels is expanding rapidly, and while there is certainly interest in no-cost content, the concern for Fubo has to be whether or not they are too late to the game for it to make a difference.
The other area of adjustment for the streamer appears to be the decision to pull back from its investment in sports betting. Last year, the company launched Fubo Sportsbook as a companion to its live streamer in hopes of pairing its sports-centric programming with an easily integrated gambling platform in states where it was legal. Though initially only available in two states — Iowa and Arizona — at the end of 2021, the company was reportedly seeing adoption 50% better than originally anticipated.
However, in January, Gandler admitted that with the explosion of sports betting laws and daily fantasy games, the gambling market had become 100% saturated. On Thursday, the exec reiterated that he believes that “the future of television will be interactive” and that the company expects to have its sportsbook operational in New Jersey in time for the football season, but the forecast for interactive sports betting has changed since Fubo launched the enterprise.
“We continue to believe that an integrated wagering platform, offering both live video and the Sportsbook will result in the best viewing and gaming experience for consumers. However, we decided to enter the wagering business in early 2021,” Gandler said. “At a time when the business climate and efficient cost of capital provided the runway to develop new business lines with longer profitability time horizons. Now, with the recession and inflation hitting 40-year highs; that no longer holds true. We recognized that the market has changed. And therefore, we have made the decision to place Fubo Gaming, our online sports wagering business, under strategic review. We will no longer pursue this opportunity on our own and are exploring the best path forward to scale the business.”
This aboutface, either due to economic conditions, or a lower-then-anticipated return on investment, dramatically changes the future of the company. fuboTV had been centering the sportsbook as the next evoution in live sports watching by integrating betting options based on the games and events that customers were viewing.
In December 2021, Gandler said “Fubo Sportsbook is a major pillar of fuboTV’s mission to integrate interactivity into our live TV streaming platform and define a new category of interactive sports and entertainment television. I’m very proud of how quickly the Fubo Gaming team has brought Fubo Sportsbook to market.”
Obviously seven months can be an eternity when it comes to the constantly evolving world of streaming, especially as the world continues to deal with the ramifications of a global pandemic. However, the rapid turnaround certainly raises questions about how successful the effort was while Fubo was focusing on it.
Back down below 1 million subscribers, and with YouTube TV north of 5 million and Hulu Live TV having reported 4.3 million subscribers at the end of Q1, fuboTV is at a crossroads. If the streamer is going to continue to establish itself as a player in the world of streaming, it will need to differentiate its offerings in some way.
Now that all streaming services — live and premium on-demand — are getting into the sports broadcasting arena, Fubo must find a way to stand out and offer something that no other service can. While that will apparently not be sports betting integration, it could be by bringing the added value of FAST channels to the platform. Will it be enough to keep the company afloat? Only time will tell.
fuboTV is a live TV streaming service with about 90 channels for US$ 69.99/month. This plan includes local channels, 27 of the top 35 cable channels, and regional sports networks (RSNs).
The streaming service does not carry channels from WarnerMedia-owned (CNN, TBS, and TNT) and those from A+E (A&E, History Channel, and Lifetime).