Fubo believes sports base fuels streaming pricing power

FuboTV continues to diversify its programming, having negotiated a handful of new carriage deals at the end of last year. But sports is still the bread and butter of the service, as it provides Fubo with significant pricing power in the streaming market, according to Fubo CEO and co-founder David Gandler.

Speaking at a Citi investor conference Wednesday, Gandler noted Fubo’s subscriber base is “almost 100%” comprised of sports fans, and that the platform does a good job of reeling in consumers who are specifically interested in sports.

“If you think about other virtual MVPDs or other streaming services, there is a price ceiling because more than half of their customers are general entertainment consumers,” Gandler said. “The reason why people left cable was because they didn’t want to pay. They felt that sports was causing the increases and so they wanted to leave.”

To date, Fubo has around 50,000 sporting events on its platform, Gandler noted. Now that it’s carrying 16 of Sinclair’s Bally Sports regional sports networks, the service touts “the greatest number of local sports networks in the market.” The vMVPD ended Q3 2022 with 1.23 million paid subscribers in North America.

Out of Fubo’s English-language video packages, the Pro plan is the cheapest at around $70 per month – $5 higher than its now-retired Starter plan. Fubo CFO John Janedis mentioned almost half of Fubo’s new customers are gravitating towards the premium subscription packages.

“We do a lot of testing around our different packages, right? And what we’ve been doing is preselecting these premium or higher-end packages,” Janedis said at the conference. “And we’ve also seen a good take rate on those.”

Another key element of Fubo’s sports offering, said Gandler, is that it reduces “switching fatigue” between services. Because sports is so fragmented across streaming, it’s not always easy to find the content you want to watch.

“The cognitive load required to go into another app to go set that up, to then wait until there’s an actual commercial to have to bounce back out almost negates the value of actually going in,” he explained. “So there has to be an aggregated version of something like a cable bundle in the streaming world that has greater data and greater discovery.”

Sports streaming made strides last year, with companies like Amazon and YouTube securing major sports rights deals. Amazon has said its Thursday Night Football drove record new Prime memberships, but Gandler argued sports isn’t actually Amazon’s top priority in terms of bolstering user engagement.

“Most people already have Amazon Prime. I’m sure if you survey anyone, why do you have Amazon Prime, they’ll say it’s the delivery,” Gandler said. “So I’m not sure Thursday Night Football is driving anything.”

Gandler also touched upon Fubo’s expanding free ad-supported streaming TV (FAST) offering. The vMVPD previously stated its FAST channel count stands at 60, with plans to reach 100 channels early this year.

“Because we have infinite capacity, we can actually monetize every available second,” he said, hence why Fubo is aiming to eventually reach $15+ in average advertising revenue per user (ARPU). Comparably, Gandler pointed out cable providers have typically averaged advertising ARPU rates between $8 and $10 “with real significant limitation.”

Fubo’s advertising opportunities are also fueled by local advertisers tapping into self-serve platforms, Gandler added, along with the increasing popularity of programmatic and addressable advertising.

“All of this allows us to really tap into as…call it as a cable replacement service,” he said. “More networks, more capabilities, infinite number of FAST channels, if that’s something we choose to do. And a more inclusive base because they have more access to technology.”