Inflation ‘will help us drive subscribers,’ fuboTV CEO says

fuboTV CEO and Co-Founder David Gandler joins Yahoo Finance Live to discuss the future for live sports streaming.

Video Transcript

ADAM SHAPIRO: All right, Emily. If you have not cut the cord yet and you're not streaming TV, what are you waiting for? Millions are already there. I want to read something to you from Wedbush. It's a note about FuboTV, which came out with preliminary fourth quarter yesterday. We got some guidance.

But here's what they're saying at Wedbush about Fubo-- showing their intent to not only rapidly expand product offering but also global footprint. While that likely extends the road to profitability, we think it greatly increases the scale of future profitability. Goes on to say that they maintain their outperform rating on FuboTV. Why listen to Wedbush, right?

Let's bring in the CEO from FuboTV, David Gandler, who's also the Co-Founder and the CEO. And one of the things that they're applauding you for-- you took heat for this, we talked about it the last time you were here-- was the acquisition of Molotov. How is that now integrating with where you're taking Fubo?

DAVID GANDLER: Yeah, look, well, first, Adam, thank you for having me. Happy new year. It's been a very strong year. Obviously, the market fluctuations don't really impact operations. But we have been executing as promised on all cylinders.

And the Molotov acquisition allows us to really extend our vision, not only geographically at some point, but we think we can do this very efficiently given the quality of the team, and some of the technology, that they've built, and their understanding of our business model, given that we're both virtual MVPDs.

So we're super excited about that. The integration process is underway as we speak. Obviously, given Omicron, some of the in-person meetings had to be postponed. But things are moving forward and we're super excited about 2022.

EMILY MCCORMICK: David, this is Emily here. Taking a look at your pre-announcement from earlier, you mentioned that paid subscribers at year end are expected to exceed 1.1 million. Your prior guidance was for as much as 1.07 million.

Given that you are a streaming platform, you're considered a business that has benefited from stay at home behavior. What has really been driving this acceleration when we've been seeing some other streaming platforms struggling with churn and continuing to build on subscriber counts?

DAVID GANDLER: Yeah, great question, Emily. So first of all, Fubo has a sector-leading NPS score of 65, which is very important, because it really highlights the quality of the platform, which is evident in our churn results. We're going to improve this quarter, or the fourth quarter, I should say, roughly about 200 basis points, which means that it's really our 13th consecutive quarter of improved churn.

Product features continue to play an important role in our ability to attract sports customers. And the overall experience, coupled with the price, we think is really a key driver in our ability to continue to take market share. You also mentioned that the pandemic has obviously played a role in our ability to continue to grow our business.

I would like to highlight the fact that 2022, although we are seeing interest rates, you know, creep higher, which has impacted the price of growth stocks, what we do believe is that the increase in inflation will also help us drive subscribers going forward. As you know, discretionary income tends to come down during periods of higher inflation.

And with higher inflation, people spend less money going to restaurants, and traveling, and spend more time at home. And given the cost of a virtual MVPD subscription relative to a cable subscription, we think that that will also enhance our ability to drive subscribers in 2022.

ADAM SHAPIRO: We've also talked with you in the past about being at the forefront of engagement. I mean, look, if you're streaming from one of the competitor services that competes with you, you're still a passive viewer, whether you're doing old-fashioned cable or streaming. You're engaging people in so many ways that can generate revenue with sports, but I wanted to dig in on something, because you understand the sports world.

There's this news that huge players like Apple may be negotiating for rights to Major League Baseball. As you look at your future, and you're going to be up against a almost $3 trillion market cap company bidding for sports licensing, how do you beat Apple?

DAVID GANDLER: Yeah, good question. So there's always a positive or a negative. On the one hand, the positive is that it is a $3 trillion market cap. And as we continue to improve our business to create a better product, we certainly anticipate transferring some of that enterprise value over to FuboTV. And there's a lot of that enterprise value there. So we're very happy about that component.

As it relates to baseball specifically, we've seen these rights move to Facebook, and to Twitter, and to other platforms. And what we've seen and what we've been able to demonstrate is that our job is to ensure that customers watch sports. And I think we've done a great job for our content partners, the leagues, and the media companies, as well as for our consumers in terms of discovery and creating that experience that people have come to enjoy.

So this is part of being in the business. Most of the major rights are already locked up for the next decade, as you know. So we feel very comfortable in our position to continue to grow our business and focus as part of our 2022 initiatives on our path to profitability and the expansion of gross margins.

EMILY MCCORMICK: In addition to streaming, Fubo also has a growing sports betting business with Sportsbook. And that's now available in both Iowa and Arizona. I'm wondering, what will the next state or states be? And what are the hurdles left to clear to continue this expansion?

DAVID GANDLER: Yeah. Well, thank you, Emily. Well, you know, as you know, we announced our desire to enter the sports betting space in January-- actually, 12 months ago. And it's pretty amazing-- we haven't gotten credit for it yet, but we have delivered on that promise to launch within 12 months. We did that in two states, as you've noted.

There are a number of other states that were looking to launch in the next couple of months-- New Jersey being one of the states in that lineup. We'll continue to expand the footprint for gaming. Because really the key that nobody's been able to unlock so far is casual wagering.

Right now, you have an enormous number of people that have been betting, whether through retail or through illegal, you know, bookmakers. And right now, there's an opportunity for those people to play, but casual gaming is still an area where we think we're well-positioned just given our sports-first video product. So we'll look to continue to expand geographically and focus on creating better integrations between our TV product and the book. And hopefully that will allow us to increase our subscriber funnel as well as our gaming funnel to drive our flywheel.

ADAM SHAPIRO: The company is FuboTV, the Co-Founder and CEO is David Gandler. It was good to have you here, David. All the best as you go into 2022, we look forward to the updates.