FuboTV is betting big on legal online sports wagering. They’ve announced two major acquisitions in the last six months, taking daring steps into a new direction beyond the digital MVPD (Multichannel Video Distributor) model. Launching a new fantasy sports betting service and their own Sportsbook; FuboTV is creating new digital products which will be revenue positive, and serve as subscriber acquisition tools for the dMVPD. When big-league rights come up for renegotiation later this decade, expect FuboTV to be at the table to disrupt the incumbents.
If your business is sports and you don’t have a strategy for legalized sports betting, cable nevers, and Gen Z … give this a read, and if nothing else you might come away with some ideas.
It’s no secret that cable and satellite TV subscriptions are declining in North America. Indeed there’s a growing cohort of ‘cable-nevers’ causing satellite and cable TV distributors to shake in their boots. These Millennial and younger generations have never paid for a cable or satellite TV subscription in their life, and have no intention of doing so ever. If it’s not online, they’re not interested. A number of dMVPDs (digital multichannel video programming distributors) have popped up online to serve this growing portion of the market.
Enter Fubo TV, a sport-focussed dMVPD and broadcaster. By providing ‘the most sports for the least money’ Fubo is narrowing in on cable nevers and cord cutters looking for the thrill of live sports. Sounds good right?
FuboTV’s basic package is 8 channels for $15 a month, no contract required. Seven of these 8 channels are sports services, 1 of which is operated by FuboTV itself. In comparison a monthly subscription to Rogers Cable’s SportsNet Now service (six sports network feeds) will run you $19.99 a month, DAZN same story. FuboTV also offers a number of non-sports services which are available as add-on services to the core sports offering.
I know many readers will be quick to point out: hey, listen, the content isn’t apples for apples. FuboTV’s owned and operated networks don’t have the same rights as the incumbents do, of course they’re cheaper! For now… Major incumbents like ESPN, CBS Sports, NBC Sports, Fox Sports, Rogers Sportsnet, TSN and the like may not feel much competitive pressure from the FuboTV rights acquisition team for the major league’s rights. But believe me, it’s coming.
You see, the classic pay TV sports network model relies on two basic revenue streams, both of which have come under pressure in the 21st century. First, networks collect carriage fees paid by cable and satellite MVPDs who see sports networks as key value drivers in their programming packages. With the cable and satellite industry losing subscribers at a rate of about 2% a year for the last 8 to 10 years, the carriage fees traditional media brands can charge cable and satellite operators are becoming harder to maintain. Expect these to continue falling in the near and middle term.
Second, is sales of advertising to brands keen to associate themselves with the ‘thrill of the big game’. But television advertising revenues are also falling… Just look at Superbowl LV as an example. Major advertisers have announced they’re not renewing their Superbowl television ad spots. CBS Sports, who is hosting this year’s feed and selling the corresponding ad inventory are not sold out as of time of writing (late January!) This is unheard of, and not a knock on the hard-working sales team over at CBS. Rather a sign of the times.
TV advertising has generally fallen off a cliff. Media buyers are moving an increasingly large proportion of spend to digital platforms: social media and other websites where they can better target and more widely distribute the spend and come closer to the actual point of purchase which these days is overwhelmingly online.
With declining revenue from advertising, and declining carriage fees, traditional sports networks are in a tricky spot. Should the cost of rights to exhibit live major league sports start to increase they will find it difficult to compete with players with growing audiences, and diverse revenue streams.
Enter FuboTV who will very soon have their own online sports gambling business injecting cash to the business.
This performance enhancing juice will give FuboTV the shot in the arm they need to go out and buy exclusive rights away from traditional media players. Increasing their MVPD subscriptions, users of their ad-supported digital fantasy leagues, and gambling revenue.
In a world where the house always wins, why not make a big bet on online sports betting?
FuboTV’s announced they are planning to make their sports betting service and their fantasy sports products available to anyone of age. Opening their sportsbook and fantasy sports leagues to the public, rather than limiting them to subscribers only is a brilliant move.
Launching their own online ad-supported fantasy leagues opens new advertising inventory for digitally inclined sports advertisers (think Coca Cola, Pepsi, Burger King, Stella Artois) and just makes sense. Giving the sales team new inventory to chase down is a good thing and this revenue stream will surely grow.
If the product is well done, the digital sports betting platform will surely win a share of the sports gambling industry. That’s a big pool by the way. There were more than $960M in bets placed in New Jersey alone in November 2020.
These investments will work as both user-acquisition channels and new revenue streams.
I’m calling these moves a game changer. Not only will FuboTV be able to grow their new businesses: the sportsbook, & the fantasy leagues; the d MVPD and Network have lots of room to grow as well. If they do it right they will soon give their content acquisition team major bank to go after the premium sports leagues, and the kind of cash flow and growth potential backing them up, to really scare not just the traditional sports media, but the traditional cable distributors as well.
Being digital only, FuboTV can be nimble, and scale far more quickly than any cable or satellite operator can. Integrating the sportsbook into broadcast will be easier than ever, as will placing your bet. FuboTV is solving the challenges to the payTV sports service model by innovating their way forward with timely investments in digital products to give fans what they want, where they want it.
I’m betting big on Fubo’s future.