The subscription streamer is also in the early stages of putting together an original content team
The sports-centric subscription OTT streamer FuboTV is preparing to launch a free ad-supported streaming channel later this year and branch into original content for the first time.
“Ads are certainly an area that we believe is going to allow us to grow our business profitably,” CEO David Gandler told TheWrap, noting a target launch for an ad-supported channel around the third or fourth quarter of 2019. “It will be a little bit smaller and more straightforward, but we certainly want to take advantage of the current trends.”
In the third quarter of 2019, FuboTV also plans to launch a new minute-long ad-break dubbed “Sports Break” with short-form original content sandwiched between two ads. Eventually, the streamer plans to create longer-form content to be housed on one of its owned-and-operated channels from inside the platform.
“As we launch the network, we will launch with one hour of original programming and as the ad component starts to grow we’ll add additional original programming,” he said. “It’s kind of the next step. We’re in the process of putting a small team together.”
In addition, Gandler said the company plans to introduce its first content recommendation engine that will help its 250,000 users connect with content they want to watch (and hopefully keep them on the platform longer). The company is exploring adding Netflix-like profiles so that each member of a household can have their own recommendation preferences.
While the subscription model has proven successful for the 4-year-old company, Gandler said he can’t ignore the growth in ad-supported models in the digital video space. FuboTV currently runs some advertising, mostly through server-side ad insertion, but the new service would not require users to pay a monthly fee.
“The sensitivity for us is that we’re a much smaller company and so we have to focus — any deviation could severely impact the company. We don’t have a lot of room for error,” he said. “These other guys can burn $1 billion, $2 billion and say, ‘Great, We’ll just figure it out tomorrow morning.’ We just don’t have that luxury.”
The new move follows a strong period of growth for FuboTV, which has seen time spent on the platform increase significantly over the past year. On connected TVs, where a majority of FuboTV viewing takes place, the average monthly user session increased 30% in the last seven months, from 70 hours in October to 100 hours in April.
With the new ad-supported efforts, Gandler expects FuboTV to be in 50 million homes by the end of the year.
Gandler also explained FuboTV’s recent price hike, from $45 to $55 per month, as the platform added a slate of entertainment channels from both Viacom and Turner.
“Sports fans, in particular, are prepared to pay more because sports is expensive,” he said. “I think at the core those folks are still getting an excellent deal. If you look at the New York region in particular, we’ve got all the regional sports networks and we carry a plethora of league networks in our basic packaging. So, from that perspective, I don’t see that as being an issue.”
But he noted that expanding beyond sports programming was borne of necessity to grow engagement. “Having a sports-only subscription service does not work unless it’s a pay-per-view platform. People follow teams, they don’t follow leagues. If you’re a Knicks fan, that doesn’t mean you’re a Cavaliers fan,” he said. “One of the major learnings I had was, you can’t have people coming in for only three hours a week.”
So Gandler said he approached FuboTV’s content offerings from a cord-cutter’s perspective. “We have to constantly evaluate the value proposition for this product,” he said. “So if you’re going to replace cable, you need to make sure you have enough content, and entertainment is clearly a value proposition for our users.
“Like I said, you can’t just have sports because the person comes in, watches a three-hour game — what do you want them to do after that? So I think that we’re looking at this more as a sports-first cable replacement product. You come for the sports and you stay for the entertainment.”