FuboTV to Review Sportsbook Plan as Streaming Service Seeks a Partner
FuboTV executives remain certain that an online wagering application tied to a television streaming service will be the ideal platform for sports bettors. However, on Thursday, they indicated their sports-centric company wouldn’t be able to do it on its own.
In a letter to shareholders that coincided with the streaming service’s second quarter earnings report, the company said its sports betting division is “under strategic review” with talks progressing – internally and externally – about its future.
Pin the blame on the economy.
While our disciplined sportsbook progress continues, in light of a rapidly-evolving macro-economic environment, we believe it is important to be even more capital efficient than originally scoped,” the letter stated. “We are taking steps to de-risk our business and have made the decision to no longer go down the wagering path independently.”
In a subsequent call with investment analysts Thursday afternoon, Fubo CEO David Gandler said that when the company entered the sports betting business more than 18 months ago, it did so when “the cost of capital was pretty much free,” and a smoother business climate made it more appetizing to invest in projects that come with “longer profitability time horizons.”
Now, with an economy teetering on recession – or already in one, according to some – and inflation at levels last seen 40 years ago, Fubo’s focus must be on “reducing our cash burn,” Gandler said.
According to Fubo’s quarterly financial report, the company reported a net loss of $116.3 million in the last quarter. That’s compared to a loss of $94.9 million for the same quarter last year.
New Jersey to Launch Soon
The Fubo Sportsbook app is currently available in Arizona and Iowa. However, even as the company embarks on a strategic review, it’s still committing resources to sports betting. The company recently submitted its application to the New Jersey Division of Gaming Enforcement, and Gandler said he expects it to be available there by the start of football season.
Gandler also told analysts he expects Fubo to launch in a fourth state before the end of the year.
The company has access agreements in place in seven other states. It has rights in Indiana, Louisiana, Mississippi, and Missouri through a deal with Caesars Entertainment (Caesars is also Fubo’s partner in New Jersey). It also has an agreement with The Cordish Companies for a skin in Pennsylvania.
Fubo also has online access deals in place with two professional sports teams. One, with the Houston Dynamo, gives the company access in Texas, while its pact with the Cleveland Cavaliers gives them rights in Ohio. Last month, Fubo and the Cavaliers submitted their application to Ohio regulators in hopes of being approved to launch on Jan. 1.
With that many access deals in place, and in particular such large states as New Jersey, Ohio, Pennsylvania, and Texas, Fubo may be an attractive acquisition target for a company looking to quickly compete with some of the largest online operators in the US market.
Gandler, though, cautioned that the company’s intent is not to expedite rollouts in all states where it has skin access and sports betting is legal.
“We are looking for partners,” he added. “We will slow roll until we find the right partner. But, you know, we’re having conversations. I would say we’re pretty early on.”
TV Subscriber Base Increasing
One of the driving innovations behind Fubo Sportbook has been the integration of the mobile app with a user’s FuboTV account. That integration, called “Watching Now,” allows bettors to see wagering markets on the game they’re watching directly on the app without searching. Gandler said that one prospective partner told him they’d never seen the developments Fubo’s working on for its app.
Some of those planned developments may be unveiled during Fubo’s investor day presentation, which is scheduled for Aug. 16.
For the quarter that ended on June 30, Fubo reported 947,000 subscribers in North America, an increase of 41% from the same quarter last year. With football season about to kick off, Fubo leaders expect the North American subscriber base to approach 1.2 million in this quarter.
However, the average revenue per user (ARPU) for subscriptions rose just 2% from the same time last year to $64.5 million. Meanwhile, advertising ARPU dropped by 18% over the same time frame to $7.3 million.
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