Sports-focused live TV streamer Fubo is seeing early signs of traction with users from its limited launch of a completely free streaming tier in Q2. And while it faces competition on multiple fronts, executives on Tuesday reiterated a future vision for the virtual MVPD to become a so-called “super aggregator” that provides various programming lineups with different package and pricing options within one unified and personalized user interface.
For now the Fubo Free tier, launched in May, is only available to previous paid subscribers who paused or cancelled their subscription and those on a free trial that haven’t converted to paid users. The initial aim is to get consumers that have churned off the service to keep engaging in some way (and keep generating ad revenue) and hopefully entice them to resubscribe to the virtual MVPD when their primary sport season resumes.
Fubo already included free ad-supported streaming TV (FAST) channels within its premium streaming pay TV lineup but recently decided to offer the collection of nearly 200 free streaming channels outside of the paywall. The free tier doesn’t include the premium entertainment or sports networks found in a paid Fubo subscription.
Down the line, it’s considering opening access for the free tier to additional segments – in part to drive upsells to paid subscriptions and pull viewers into the Fubo streaming platform ecosystem.
On Tuesday, Fubo reported Q2 earnings where executives shared updates on the initial launch and plans for the future.
In terms of traction with the first cohort, Fubo CEO David Gandler prefaced by saying it’s “extraordinarily early” but added the company is pleased with the amount of trials or users it’s getting on the freemium tier. However, it’s “too soon to call” as to what it means in terms of subscriber retention.
Fubo CFO John Janedis added that the roll out is very specific in its focus on customers churning out, but that in “early indications we’re seeing some strong reactivation” and seems “very compelling.” At the same time, he said work needs to be done around A/B testing to understand how to drive more volume back into the paid funnel.
“We’ll probably put more resources behind that very soon and then see if it makes sense to begin to expand that out to other cohorts,” Janedis commented.
Fubo ended the period with around 1.45 million North American subscribers – increasing yoy from 1.16 million at the end of Q2 a year ago but declining sequentially from the 1.51 million it had at the end of Q1 (worth noting that as a sports-focused streaming service, Fubo tends to have typical subscriber seasonality aligning with sports). In Q2 the vMVPD dropped nearly 20 channels from Warner Bros. Discovery when the two couldn’t reach deal terms but the service didn’t see as big of an impact on quarterly subscriber losses as it would’ve expected, Gandler noted.
Competition from aggregators, TV OEMs?
As for consideration of expanding the free tier to additional cohorts, that is part of a larger vision to be a “super aggregator” offering access to content and TV channel packages with various lineups and price points within one user interface and ecosystem that reduces friction for viewers.
Also key to that goal are user experience features powered by its in-house tech that it views as a differentiator, such as multi-view and more recently AI-powered on-demand playlists. For example, in Q2, Fubo extended availability of those AI-driven playlist, which provide summaries and recap highlights from previously recorded live games for select sports (like all three-point shots from a basketball game). Earlier this year it also introduced AI-generated headlines for live TV news programs to help showcase and allow users to switch between in-progress news feeds that align with their interests.
In its Q2 letter to shareholders Fubo said “Fubo Free is the foundational layer of our Super Aggregation strategy, which aims to offer users premium content at different price points, all within the Fubo ecosystem. Our vision is to offer consumers a seamless way to access all of the content they love without requiring users to sign into different apps and stream from multiple interfaces.”
In addition, Gandler on the earnings call shared similar comments in opening remarks around aggregating premium content and therefore "differentiating our service from the so-called soft bundles on the market."
And it wants to provide more types of content options within tiered offerings.
“We plan to further build out our tiered offering with standalone content that does not require the purchase of the main Fubo product. This content can range from SVOD to pay-per-view and TVOD to skinny bundles,” Gandler said in opening remarks, without sharing additional details on what shape that will take. “We look forward to sharing more in the weeks and months ahead.”
For sure, Fubo isn’t the only streamer that has ambitions to be the go-to destination for viewers by aggregating content in a user-friendly environment. Amazon’s Prime Video, for example, has stated aims to be a one-stop entertainment hub that offers access to partner SVOD apps, TVOD with TV and rentals, live sports, and on-demand original and licensed content. Fubo in its current form is different from Prime Video for many reasons, one being that as a vMVPD, Fubo’s programming is primarily a pay TV lineup with live premium traditional networks that's more akin to traditional cable. Fubo execs have also previously emphasized it’s different than other streaming services in that it’s not looking to be an “app store” where viewers still need to jump in and out of different streaming apps, which creates friction, instead providing a single user interface to find and access content with premium channel lineups.
But it’s not the only one with the idea of an integrated user interface and access to free content either.
Smart TV and connected TV device players (spanning Roku, Vizio, Samsung, Amazon Fire TV, Google, Xumo and others) are building operating systems that aim to take advantage of their position as increasingly the entry point of TV viewing and surface recommendations and help content discovery from across the app ecosystem while also offering their own embedded FAST services. Google today just debuted the Google TV Streamer, an external 4K streaming entertainment device that also doubles as a smart home hub.
Most smart TV and streaming device makers don’t require subscriptions to access FAST content but they also don't have their own premium pay TV lineups - like those offered by Fubo - embedded in the device (although tech giant Google potentially could with its leading vMVPD YouTube TV).
And Fubo doesn’t appear to view TV OEMs as competition with its new free tier and larger aggregation aims – instead suggesting they’re potential partners.
Asked specifically by analysts on the earnings call as to whether it sees a competitive threat from those TV makers that already offer similar FAST channels without the need for a subscription service at all, Fubo executives pushed back a bit.
Gandler said that the FAST business is really complementary for Fubo, with about 7% of its viewership within the paid service coming from FAST. He noted “millions of people” enter the platform organically each year, with the free tier providing incremental opportunity to engage consumers and highlight the platform’s capabilities, features, premium programming and availability on a variety of connected devices. And that ability to access Fubo’s interface regardless of the device is part of the appeal.
The interesting thing about Fubo compared to TV OEMs, according to the chief executive, is that most people have two or more televisions in their homes, typically with TVs from different manufacturers in different rooms.
“So having that seamless way…that you can use Fubo across different devices, I think is extremely appealing,” Gandler noted. “And so at this moment in time I look at them more as potential business development partners versus direct competitors.”
That said, Fubo itself is an app that users need to go in and out of, so how its so-called “Super Aggregation” vision ultimately plays out remains to be seen.
But its sports-focused lineup is another area where it aims to differentiate, including carrying more local sports with the additions of YES Network and MASN at the beginning of the baseball season.
Venu Sports hearing starts
Fubo is looking to stand out in the market as it continues to face competition – not only from fellow virtual MVPDs like YouTube TV and Hulu + Live TV but also a forthcoming sports streaming service from Venu Sports.
The joint venture between Disney, Warner Bros. Discovery and Fox plans to launch the service this fall for $42.99 per month, combining the entities’ sports assets into one app. Fubo filed an antitrust lawsuit against the JV entities claiming harms to its business, consumers and competition. A hearing on Fubo’s request for a preliminary injunction to prevent the JV’s launch begins today, August 6, in the U.S. District Court for the Southern District of New York.
Fubo executives didn’t take questions about the lawsuit on the call but in opening remarks Gandler said “we continue to strongly believe in the merits of our case and look forward to going before the judge this week.”
Audience is the ‘sweet spot’ for brands
While Fubo faces competitive challenges, it posted positive quarterly results including total global revenue of $391 million, up 25% year over year, and a narrowed net loss of $25.8 million.
Quarterly Adjusted EBITDA of negative $11 million also improved compared to the year prior. North American monthly ARPU increased yoy to $85.69. Fubo generated advertising revenue of $26.3 million in Q2, up 14% yoy, which the company attributed to its work on boosting its visibility within ad agency holding companies via improved go-to-market strategies.
This year it also introduced new CTV ad units like interactive, pause and enhanced banner ads.
And Fubo believes its engaged, affluent and sports-focused audience is the “sweet spot” for brands and TV advertisers. In the shareholder letter, Fubo said its viewers are similar but younger than most traditional pay TV viewers yet skew older and have more buying power than typical SVOD viewers.
“With Fubo, brands have the ability to engage with our viewers as they move through personal milestones, capitalizing on major life events,” the company said.
The letter also cited iSpot metrics showing the vMVPD provides incremental reach so that brands can get messages in front of consumers that they can’t access on traditional linear pay TV. Per iSpot, 62% of ad impressions served on Fubo reach incremental households that aren’t found on linear.