Fubo’s sports focus sets it apart from any other vMVPD. Here are four ways the approach hurts and helps the service with subscriber acquisition, ad ARPU, technology development, and strike resilience.
Q2 subscriber losses are seasonal
Fubo’s sharp focus on sports sets it apart from all the other vMVPDs. Subscribers to the service are mostly sports fans and do so to keep up with their favorite leagues and teams. In fact, fubo started life focused on attracting younger, soccer-obsessed Latinos. The sports focus makes fubo especially sensitive to sports seasons.
In Q2 2023, fubo lost 173,000 subscribers, a decline of 15%. However, compared to Q2 2022, the service gained 109,000 subscribers, an increase of 9%. Fubo has suffered subscriber declines yearly between 2019 and 2023, except for the COVID-influenced Q2 2021. These declines can be explained by the rhythm of the sports seasons. For example, England’s Premier League, Mexico’s Liga MX, and the American Football season are all finished by the second quarter. Undoubtedly, some of the fans of those leagues will cancel fubo for the summer and save $250.
Fubo’s ad ARPU fell in Q2 but may recover in Q3 and beyond
On the earnings call, fubo’s Chief Financial Officer John Janedis was pleased with the company’s ability to attract advertisers:
“Despite the continued challenges many advertising businesses are facing, I am pleased with our ability to deliver $22.8 million in advertising revenue across North America, a 5% increase versus the prior-year period.”
However, subscribers increased by 9% between Q2 2022 and Q2 2023. In other words, the average monthly ad revenue earned per subscriber fell from $7.26 to $6.12 over the same period. That is not to say that fubo is exceptional in losing ground in ad revenue. Roku, WB Discovery, and many others have complained about the ad spending pullback over the last three quarters.
Fubo is upbeat about the trajectory of ads. Mr. Janedis says there has been a “significant uptick” in ad revenue in July. David Gandler, the company’s CEO, believes fubo’s focus on local sports via the RSNs it carries provides advantages in a Presidential election year:
“And let’s not forget, given our local programming capabilities, we think we’re going to have a pretty strong opportunity within our local sports coverage to be able to really drive political business.”
Playing technology catch-up
Mr. Gandler says technology is one of the three key differentiators for fubo over the competition. For example, it was the first vMVPD to offer live 4K sports streaming. He says it is still a key advantage for the service. In the earnings call, he discussed a new feature the company has in beta:
“And we’ve tested a new AI feature with the NBA finals, which allows viewers to relive the most exciting moments, allowing us to really index in real time a lot of these capabilities.”
Users of YouTube TV might be shaking their heads because the vMVPD service introduced its catch-up-to-live feature a year ago. It allows a viewer joining a game in progress to watch all the important plays to that point. I became addicted to the feature during the last Premier League season, and it made me turn to YouTube TV first every time I wanted to watch a game.
Fubo’s sports audience will demand advanced features like catch-up-to-live. But it is tough for a small company like fubo to compete on technology with a giant like Google. One approach that can help is to resist the temptation to build everything and license technology from third-party providers. For example, a sports technology start-up called Thuuz had catch-up-to-live technology in 2017!
The SAG-AFTRA strike’s impact on fubo
The SAG-AFTRA strike is hanging over the TV industry like the sword of Damocles. It is hard for any service provider to be confident in its forecasts because the absence of new scripted content will derail growth plans. That said, Mr. Gandler thinks fubo can weather the ravages of the strike:
“And given our focus on live sports, we expect that Fubo will remain largely insulated from the Hollywood union strikes.”
And to emphasize his confidence, fubo is forecasting subscriber growth in line with past performance. The company says it should add half a million North American subscribers in the second half of 2023, which it did in the second half of 2022.
