How FuboTV built an online subscription TV service for soccer nuts

“TV is a very expensive game. The expectations are that TV will acquire the most valuable sports rights because they offer the most scale,” said David Gandler, co-founder and CEO of FuboTV. “And the more scale you have, the more compelling your offering is with advertisers, and the more you can draw from fees with distributors.”

While soccer is growing in popularity in the United States, only the top international tournaments — from the World Cup to Euro 2016 — and England’s Premier League command audiences sizable enough for TV. NBC’s coverage of the Premier League averaged 514,000 viewers during the most recent season. Meanwhile, ESPN and ABC’s broadcast of the 2014 World Cup Final hit 17.3 million TV viewers in the U.S.

It’s why U.S. broadcasters have been willing to fork over huge amounts of cash to broadcast these tournaments. NBC, for instance, is paying $1 billion across six years for the rights to the Premier League. Fox Sports is paying $425 million to air the 2018 and 2022 FIFA World Cups.

Even with $20 million in backing from investors like 21st Century Fox and Sky, FuboTV can’t compete at those prices. After all, its subscriber revenue at $10 a month for 50,000 subscribers only works out to $6 million annually — and a chunk of that goes to content partners like Univision, BeIn Sports and One World Sports. These partners already have broadcast rights to international and domestic tournaments — and they offer many games that the major sports broadcasters wouldn’t touch.

“There comes a point where it doesn’t make sense [for TV networks] to bring on content that drives down their viewership,” said Gandler. “And there’s a significant amount of live soccer available that should be distributed digitally.”

There’s plenty of evidence that people are willing to pay for content that they’re passionate about. It’s how streaming services like Crunchyroll and DramaFever, which both offer less mainstream international content, have been able to net hundreds of thousands of subscribers.

The key to making all this work, of course, is to keep the cost of content low. FuboTV doesn’t generate enough revenue at this point to afford ESPN, which is estimated to cost more than $6 per subscriber per month, according to SNL Kagan. But it can afford smaller networks like BeIn, which comes in at 10 cents per subscriber per month. By bundling enough of these channels together, the idea is that the offering is compelling enough to attract a broad enough audience.

FuboTV’s target is to hit 1 million paying subscribers in the next three or four years, Gandler said. One way it hopes to achieve that is by carrying “adjacent” networks like Revolt (music), El Rey (Robert Rodriguez’s grindhouse channel) and Pivot (original programming for millennials), which its subscribers might be interested in even though those channels don’t offer live soccer games.

Ninety percent of FuboTV’s audience is between the ages of 18 and 44. And while soccer is why they signed up for FuboTV, they like other content, too. By slowly adding some ancillary channels, FuboTV has discovered its audience is willing to watch the content — and is clamoring for more. The service receives about 3,000 to 4,000 comments per week from subscribers asking when FuboTV is adding more content — and not necessarily sports, Gandler said.

“It’s important to build adjacencies based on the type of content your current audience likes,” said Gandler. “It allows us to continue building momentum.”