FuboTV, which is primarily known for streaming international soccer league games — think of a smaller version of Hulu Live, YouTube TV, or Sling TV — last week announced plans to dip its toes into Garden State waters that have yielded perilously close to $1 billion in sports wagers in recent months.
The deal with Caesars Entertainment — and news of a late 2021 sports betting app rollout — comes as the company just reported a milestone of $105.1 million in revenue for the fourth quarter of 2020.
That includes 547,800 subscribers to its pay-TV bundle delivered over the internet. It’s also another example of how new sports betting operators are arriving with a built-in core of loyal sports fans who figure to be amenable to a simple toggle from watching a sporting event to placing a bet on that game.
A ‘Vig’-orous acquisition
A key to the effort to offer sports betting in New Jersey, Indiana, and Iowa was the acquisition last September of Vigtory, a company that was “founded by bettors who sought to tackle the most strategic challenge that sportsbooks face: how to build the greatest betting experience at the best possible price.”
Hence the use of “Vig” in the company’s name — short for the traditional “vigorish” takeout of roughly 10% by bookmakers on both the legal and illegal sides of the operations. Vigtory’s business model has been to cater to big-money gamblers who wager thousands of dollars per game. FuboTV plans to offer free-to-play games in states that don’t yet sanction legal sports betting.
Company co-founder and CEO David Gandler said fuboTV plans to use artificial intelligence tools to help it collect approximately 22 billion data points per month.
In last week’s videoconference with market analysts, Gandler said, “We do a good job surfacing content for our users — the right content at the right time. We think we can leverage that data for wagering as well. We think there are a lot of areas where our video team can support the wagering group in really driving a lot of engagement.”
The lure of football led fuboTV’s gain of 92,800 subscribers in the fourth quarter. In the second half of 2020, fubo added 261,754 subscribers to nearly double its total subscriber base.
“The addition of Vigtory to fuboTV is a pivotal event in the sports entertainment industry,” said Vigtory co-CEO Scott Butera in a joint statement with fuboTV. “As sports fans increasingly desire interactive sports events, sports betting and related businesses such as iGaming and free-to-play contests have become a critical component of fan engagement.”
The statement said “combining fuboTV’s broad and deep offering of live streamed sporting events with Vigtory’s world-class sports betting products creates the ultimate sports betting experience for consumers.”
Two other states also get fubo bets
The Caesars deal brings fuboTV into the New Jersey and Indiana markets, while a separate deal with Casino Queen previously brought the company access in Iowa.
“We could not be more excited to bring fubo Sportsbook to market in the fourth quarter, and today’s market access licenses for Indiana and New Jersey will help us reach even more consumers at launch,” said Gandler. FuboTV also has reached agreements with MLB and the NBA to become an “authorized gaming operator” for each league.
While fuboTV is not well-known among baby boomers, it offers its younger-skewed subscribers access to tens of thousands of live sporting events annually — with news and entertainment content also in the mix.
More than 40 of the top 50 Nielsen-ranked networks across sports, news, and entertainment are available on fuboTV.
“We believe online sports wagering is a highly complementary business to our sports-first live TV streaming platform,” said Gandler. “We don’t see wagering as simply an add-on product to fuboTV.
“Instead, we believe there is a real flywheel opportunity with streaming video content and interactivity. Our free-to-play gaming experience, which will be available to all consumers, will build further scale to fuboTV, essentially acting as another lead generator for driving subscribers to our streaming video platform and, ultimately, our sportsbook.
“We not only expect sports wagering to become a new line of business and source of revenue, but we also expect that it will increase user engagement on fuboTV — resulting in higher ad monetization, better subscriber retention, and reduced subscriber acquisition costs. Uniquely, fuboTV will be a media company and sportsbook all-in-one.
“We believe fubo sits firmly at the intersection of three mega trends: the secular decline of traditional television; the shift of TV ad dollars to connected devices; and online sports wagering — a market opportunity we believe to be complementary to our sports-first live TV streaming platform.”
FuboTV’s income consists of subscription revenue, which was up 91% year-over-year from $47.9 million to $91.4 million, and advertising revenue, which was up 157% year-over-year from $5.1 million to $13.1 million.