Fubo on Friday reported third-quarter revenue and subscriber growth that exceeded its own expectations. During the earnings call, executives highlighted plans to build out features on the sports-centric virtual MVPD platform as it aims to be a “super aggregator” for fans, with personalization and tech key parts of the draw.
Speaking on a call for investors Friday, CEO David Gandler said Fubo believes the industry will shift to “super aggregation,” with distribution platforms packaging content in different ways and delivering it at multiple price points. That could mean different models, he said, be it entry level AVOD and FAST tiers, skinny bundles containing multiple premium channels and Plus services, or a full vMVPD bundle.
“Fubo’s goal is to be a super aggregator, and we are well on our way,” Gandler said, pointing to live TV service’s lineup of sports, news and entertainment, delivered through a single customized app.
In an increasingly fragmented world of sports viewing, other Fubo executives have recently pegged its value proposition as transitioning towards ease of use. And Gandler on Friday cited intentions to deliver a more personalized experience as it focuses on creating “must-have” features.
First up on the roadmap is playlists. Using Fubo’s proprietary video AI technology, Gandler said it “will allow the user to view and select the most important moments of live sports events recorded on their DVR.” For example, viewers could pick to watch just scoring drives, or all three-point shots from a recorded basketball game.
The vMPVD already integrated advanced features in its platform, such as 4K streaming and multi-view capabilities.
“We believe it’s this compelling value proposition, aggregated content delivered through personalized streaming experience, that will make Fubo the gateway to television,” Gandler said.
The product features teed up follow a record quarter for Fubo subscribers, exceeding its own expectations. Fubo ended Q3 with 1.47 million subscribers, compared to 1.16 million at the end of Q2. North America revenue also exceeded guidance, growing 43% year over year to $313 million.
The strong quarter led Fubo to up its full-year 2023 North American guidance. The company now expects $1.319 billion - $1.324 billion in revenue and 1.58 million - 1.599 million subscribers in North America.
Although Q3 saw a Charter and Disney dispute that left ESPN dark on the cable operator’s systems for more than a week at the start of football season, it wasn’t material to Fubo's net adds in the quarter. Still, Gandler said the carriage dispute and ultimate deal struck marked “a true inflection point with the creation of new content distribution models” in the industry.” And Charter-Disney helps bring the market closer to where Fubo sees it going, which is the aggregation space, he said.
For Fubo, Gandler anticipates “that relationships with large tech companies could be on the horizon, as well as other distributors and content partners to be able to help them achieve their goals as well as ours.”
YouTube TV’s Sunday Ticket push didn’t hurt subscribers
The chief executive also touted strong subscriber growth in a period where it faced stiff competition - particularly in September - from leading virtual MVPD YouTube TV, which poured money to heavily promote and provide an array of discounted offers for its NFL Sunday Ticket package.
As a sports-focused live TV streaming service, Fubo tends to be strong at the start of the fall sports calendar and the NFL and college football were key drivers for subscriber additions in the period. However, Gandler said this year “is quite special because the pressure from YouTube TV I think was extraordinary” and didn’t impact Fubo’s ability to drive subscribers in a period.
In addition, executives said losing Thursday Night Football, now in Amazon Prime Video's second year of coverage, hasn’t impacted subscribers year over year.
Contributing to Fubo’s revenue growth, subscription revenue increased 43%, with North America ARPU growing 17% to an all-time high of $83.51 in the period. And the company cited favorable trends in the direction of ad market reacceleration. In Q3 Fubo delivered $30 million in North America ad revenue, up 34% yoy, with executives noting its desirable sports-centric audience and an expanded focus on direct sales alongside its programmatic business. It’s also monetizing engagement on the platform, which is at well over 100 hours.
One element playing into that is the addition of free ad-supported streaming TV (FAST) channels, where Gandler said “revenue coming in from those channels has been quite strong.”
Part of the appeal of FAST channels is relatively inexpensive programming that helps round out and augment the platform’s entertainment offering. They also give Fubo more ad inventory, thereby delivering a greater impact. In broadcast television Fubo gets little to no ad inventory, while cable provides around 2-3 minutes of ad avails, he noted. Comparatively, FAST channels bring Fubo roughly 50% of the ad inventory.
So far the vMPVD has limited its count to under 150 FAST channels, but has seen the channels take share of some of the viewership. FAST channels have “really allowed us to drive advertising revenue above and beyond where we would,” Gandler said.
Fubo is targeting positive cash flow by 2025 and in Q3 reduced its net loss by $21 million to a loss of $84.4 million. Q3 Adjusted EBITDA loss also improved to a loss of $61.5 million compared to an $83 million adjusted EBITDA loss in the same period a year ago.