Sports-centric streaming television service FuboTV says it has abandoned plans to build its sports wagering business on its own and has placed that section of its business under strategic review.
The announcement came shortly after Fubo reported its quarterly earnings on Thursday, which saw its domestic and global subscribers increase compared to the previous year.
In total, FuboTV has more than 1.2 million subscribers, including 947,000 subscribers in North America. Its domestic subscriber count was a considerable increase from 673,000 subscribers recorded at this time last year.
Subscription revenue increased to $194.4 million, up from $114.3 million last year. In the United States, Fubo TV offers a mixture of general entertainment, news, sports and lifestyle channels starting at $70 a month.
Like other services, FuboTV runs its own advertisements on some of the channels it carries. Advertising revenue grew to $21.7 million, up from $16.5 million at this time last year.
On Thursday, Fubo Chief Executive Officer David Gandler said the company's decision to integrate 40 free, ad-supported streaming (FAST) channels into its service helped expand its available advertising inventory while diluting the amount of cable networks offered on the platform. By the end of the year, Fubo TV could have around 100 FAST channels on its platform, Gandler said.
"We believe the future of television will be interactive," Gandler said. "Our differentiated offerings designed to provide our consumers with the greatest premium content through a custom and personalized viewing experience optimized for sports viewership."
Since early last year, Fubo has focused on building out its interactive wagering business that would be integrated with its live sports programming carried on the platform. At the time, Fubo TV thought it would have both the space and the money to pursue this endeavor on its own. But inflation coupled with a potential recession has shifted Wall Street's expectations for the service, and Gandler said investors want Fubo to be profitable on a much shorter timeline.
"While we believe Fubo's [business] model will prove to be both resilient and profitable, we also know that we must continue to refine and adjust our business to reflect this changing environment," Gandler said, adding that the company was now focused on reducing internal costs and would take a more conservative approach toward spending.
In a letter to shareholders published on Thursday, Gandler wrote that the company still believes that “an integrated wagering platform, offering both live video and a sportsbook, will result in the best viewing experience and gaming experience for consumers.”
“However, as we have evaluated how best to scale these capabilities in today’s market, we have concluded that we will no longer pursue this opportunity on our own,” Gandler wrote. “Accordingly, our interactive wagering business is under strategic review, [and] we are in internal and external discussions to determine the best path forward for Fubo’s gaming business and look forward to sharing more information.”
Wall Street investors appeared pleased with Fubo’s earnings and future guidance. The company's stock price rose 25 percent in after-hours trading Thursday, settling in around $3.73 a share, an increase from $2.97 at the close of the market.