FuboTV reaches $1B in annual revenue, execs not worried about YouTube’s Sunday Ticket

Virtual MVPD FuboTV in 2022 hit the milestone of reaching $1 billion in global annual revenue for the first time, while recording subscriber and advertising revenue gains in Q4. During Monday’s earnings call executives also reported encouraging early churn trends after a recent price hike, and rebuffed concerns over increased sports competition from fellow vMVPD YouTube TV.

In North America, FuboTV saw streaming revenue climb 55% year over year to $984 million for 2022, and recorded $100 million in advertising revenue. Fourth quarter North America subscription revenue was $278 million, up 36% year over year, with ad revenue in the region up 30% year over year to $33.6 million.

The virtual MVPD, which offers a sports-first focused TV lineup that competes with cable and the likes of YouTube TV, Hulu with Live TV, Sling TV and others, ended the period with 1.44 million subscribers in North America. In North America Fubo’s average revenue per user reached $75.20 in Q4, up 4% year over year. Subscribers in the Rest of the World (ROW) stood at 420,000 at the end of 2022, with Q4 revenue of $7.2 million. According to FuboTV CEO and co-founder David Gandler, users are spending an average of more than 100 hours per month on the streaming TV’s platform, and the company is feeling confident about further growth.

“There are still 60 million-plus households that have cable,” Gandler said during Monday’s earnings call, in addressing a question about future sub growth, noting that’s the pool that Fubo’s pulling from. “If you again look at our fourth quarter numbers, you’ll see that we are continuing to take disproportionate share of customers into the virtual MVPD space relative to the reported companies you’ve heard from.”  

FuboTV previously set its target of $1 billion in annual revenue and last year outlined plans to reach profitability by 2025.

In terms of subscriber growth going forward, FuboTV anticipates losses in Q1 to end the period with between 1.14-1.16 million subscribers, but to maintain double-digit sub growth for the year and end 2023 with between 1.51 and 1.53 million North American subscribers. On Monday, executives spent a fair amount of time explaining that it chose to guide relatively conservatively for future sub growth, citing five nuances happening in Q1 that were considered, including pulling forward on the World Cup cohort, typical seasonality with NFL closing its season in February, an unexpected dispute between Paramount and CBS affiliates that ended up impacting Fubo, and the implementation and timing of the healthy price bump during the first quarter.

However, despite raising prices and tacking on extra fees in Q1 the company is happy with what it’s seeing for early retention and churn, according to Gandler, who said levels so far are “performing very well relative to our initial forecast” based on the first few weeks of data. In January Fubo TV bumped the base price of U.S. plans by $5 for new subscribers alongside an $11-14 fee for regional sports networks after adding Bally Sports RSNS. The price increases, which mark Fubo’s biggest hike ever, went into effect for existing subscribers in early February.

“We’ve been very happy with retention, albeit it’s only been about three or four weeks at the moment, but things are looking very good and we’re very confident about continuing to drive growth double-digits ex-World Cup for 2023,” Gandler said.

The company believes Fubo is on track to reach its target of 2 million subscribers in 2025. The comments around good churn and retention metrics also echo earlier sentiments by executives that Fubo’s base of sports fans and sports-focused content gives it pricing power in the streaming market.

As for the Bally Sports RSNs, Fubo’s leadership didn’t seem too concerned about a seemingly imminent Chapter 11 bankruptcy filing for the struggling Diamond Sports Group. Without getting into details of the deal, Fubo TV CFO John Janedis said if Bally runs into financial struggles Fubo still does “expect the games to air,”  adding that “the term of the deal is very short-term.”    

Not concerned with YouTube TV Sunday Ticket

FuboTV also isn’t sweating competition from fellow virtual MVPD YouTube TV, which ahead of the new year secured rights to the coveted NFL Sunday Ticket package.  Although the package marks a major inroad into live sports for YouTube, Fubo leadership believes it has picked the right approach for its sports-centric streaming offering by chasing RSNs instead of pricey NFL rights.

With the inclusion of Bally, and other RSNs such as Altitude Sports, Fubo offers more than 35 regional sports networks, including at least one available to every U.S. subscriber.

“I’m actually very bullish on the direction we’ve taken,” Gandler said compared to YouTube’s path to sports. “The RSN TAM [total addressable market] is significantly larger than that of a Sunday Ticket. You’re talking about 25-35 million sports fans that care about their local sports that are still in the cable ecosystem.”  Comparatively, Gandler said Sunday Ticket historically averages around 2 million customers.

And since FuboTV never had Sunday Ticket, he suggested YouTube’s carriage of games won’t mean a major impact or loss to Fubo  – while also pointing out that Sunday Ticket will available as an a la carte option on YouTube Primetime Channels – meaning Fubo TV subs have a way to watch games it if they desire.

“I think we’ve taken the proper direction to super serve sports fans, we have some solid data around the RSNs,” Gandler commented.

Separately, in terms of bringing more sports to the Fubo platform, executives indicated they’d be eager to incorporate Turner networks from Discovery in a deal with parent Warner Bros. Discovery.

“We would love to carry Turner,” Gandler said. “Obviously that would have to be accomplished at a level that we feel makes sense given our subscriber-laden expense line.”  He noted it already has a deal with Discovery that doesn’t include Turner, which Fubo dropped back in 2020 when Turner was still part of AT&T and hasn’t had conversations yet since WBD took ownership. “Hopefully that conversation will take place at some point,” he added.

As Fubo leans into sports and RSNs, news surfaced separately that Warner Bros. Discovery is looking to get out of the regional sports networks business entirely within the next several weeks. WBD last week sent letters to teams and leagues letting them know about plans to divest interest in four RSNs, according to The Sports Business Journal, which also reported a statement from WBD as citing well-known challenges facing the RSN industry.

FAST channels growing share of ad revenue

Free ad-supported streaming TV (FAST) channels is another way Fubo TV’s been inexpensively expanding content and advertising opportunities. During Monday’s call Gandler cited FASTs as a growing component for its margin expansion strategy related to leverage for subscriber-related expenses.

Adding FAST channels, he noted, bolsters Fubo on two fronts: providing a wide range of programming that also helps deliver negotiating leverage with content partners, as well as providing significantly more ad inventory than current cable network deals (Fubo doesn’t have any ad inventory with broadcast networks).  

In 2022 Fubo’s 80+ FAST channels generated 5% of total ad revenue, up markedly from the 1% they contributed in 2021. Gandler added that Fubo’s working to enhance discovery of FAST channels on the platform further as it looks to increase engagement and ad opportunities.

In Q4 Fubo advertising revenue grew 30% year over year, in a period where others in the media space have seen impacts from a challenging ad market. Still Fubo said it outperformed the CTV market and in the quarter added nearly 175 new advertisers, sold out of World Cup inventory and saw a record-breaking political season. For the full year of 2022 Fubo saw its 10 largest advertisers in 2021 increase their spend on the platform by 85% in 2022.

Still, there’s much to do on the advertising front for Fubo, Gandler said, including improving ad tech, integrating more data products and packaging of inventory.