FuboTV customers the “sweet spot” for sports betting, execs tell investors

Executives at Fubo TV said this week they were still dedicated to building out a sports-centric streaming television service that marries live content with a native sports betting platform, despite a recent decision to place the sports wagering part of its business under strategic internal review.

During an investor day on Tuesday, Fubo TV's President of Gaming Scott Butera said market conditions have changed since the streaming service announced its intention to build its own sportsbook two years ago.

Then, capital was easier to come by, as investors were happy to part with cash if it meant helping a service like Fubo TV grow. But after the two-year-long coronavirus pandemic shook up the financial market, capital became more expensive to acquire as investors shifted their expectations.

"People want to see profitability now," Butera said during a moderated question-and-answer session. "So we've decided we want to seek a partner who shares our vision, that can help us scale the business to the size that we ultimately want to be, and can do that in a responsible way."

The decision to abandon a plan to build out a sports betting business on its own was first announced earlier this month after Fubo TV revealed its quarterly earnings report. The report showed Fubo TV's subscriber base grew to just over 947,000 paying customers as it began rolling out some sports betting features in a few states.

But it continued to spend money at a breakneck pace, with Fubo TV reporting a loss of $116.3 million last quarter, a year-over-year increase of 22%.

On Tuesday, both Butera and Fubo CEO and co-founder David Gandler pointed to the expense of going at it alone in terms of developing a sports betting service that natively integrates with Fubo TV, but said allowing a third-party partner to come in should help reduce costs over the long term.

"We'd love to do this on our own, but the macro environment has changed, and we'll look to find the right partner who will help us maximize our assets and help us drive shareholder value," Gandler said.

Executives at the company said Fubo TV's current subscriber base has shown a strong interest in sports programming and betting. More than 96% of Fubo TV's customer base is watching live sports on a regular basis, with subscribers streaming a collective average of 100 million hours of content each month.

Butera said the average Fubo TV subscriber earns around $88,000 a year in income and has an average net worth of around $868,000. Subscribers are more likely to own a home, more likely to have a college degree, and — most importantly — more likely to be male, which Butera called "the sweet spot of the sports betting demographic."

Fubo TV holds licenses to offer sports betting in 10 states. To date, the company has rolled out its sports wagering feature in three states, with New Jersey coming online just this week.

Data presented by Fubo TV showed sports betters are likely to make an average deposit of around $750, which the company said is over $200 more than subscribers of competing services like Hulu, Sling TV and Philo (the latter of which offers virtually no sports programming, except for some events simulcast on children's networks operated by Paramount Global).

Right now, customers are funding their accounts and placing bets through the Fubo Sportsbook app on smartphones and tablets. In the future, the company wants to offer the same experience natively through the Fubo TV app, so customers can place bets right from their TV sets without having to miss a second of the game.

That kind of native integration will serve several purposes. For one, it will allow sports viewers who are curious about betting but who don't know the lingo or the math to learn as they watch an event, Butera said. Sophisticated betters will also have access to more in-depth data that will allow them to track their bets in real-time, the way investors track their financial portfolio by watching cable business news channels, he affirmed.

Fubo TV also wants to develop specific features that will set itself apart from the competition, including something it calls "timely betting" which will allow for real-time wagering opportunities that are reactive to an event. For instance, if a football game is tied toward the end of the match, and a team lines up for a field goal attempt, Fubo TV will be able to instantly display odds and offer viewers an opportunity to bet on whether the kicker will make the field goal.

Over the long term, Fubo TV says it will leverage its native sports betting service and consumer data habits to target customers who are more-likely to place lucrative bets through the wagering service.

"We're the only platform that can really analyze how many hours people are watching sports," Butera proclaimed. "And that gives us the ability to target our marketing, as opposed to these kinds of spray-and-pray tactics...I'm pretty confident we have an attractive proposition for somebody who shares our vision."