fuboTV (NYSE:FUBO) offers a service that is similar to a live cable TV subscription, only better. The company is on a rapid growth trajectory that was accelerated during the coronavirus pandemic, when folks wanted more in-home entertainment options.
fuboTV's stock price had an epic rise and fall in December of 2020 and is recently climbing up again after reporting excellent first-quarter earnings. For the first time in its history, it reported adding subscribers sequentially from the fourth to the first quarter. The company is in growth mode, and here are a few reasons why it can sustain the momentum.
Say bye to the cable guy
- Millions of households are cutting the cord from cable every year. Still, according to eMarketer, there are 78 million traditional pay-TV subscribers in the U.S. That's a sizable opportunity to capture, considering fuboTV has 590,000 subscribers. Even a tiny sliver of those 78 million customers would make a big difference for fuboTV.
- The signing-up process at fuboTV compared to a cable TV or satellite TV provider is easier, faster, and almost without friction. To sign up for fuboTV, it takes a few clicks and a payment option and within a few minutes, you can start watching programming. Getting cable or satellite TV can take days (if not weeks) to set up and usually requires professional installation.
- At fuboTV, you can sign up with no contract and cancel anytime without penalties. If you want to give yourself a headache, try reading the fine print and contract you must agree to, sometimes for up to two years, to get cable or satellite TV.
- All things considered, fuboTV often costs less than cable or satellite.
- fuboTV is a superior service that is more in line with how folks watch content nowadays -- on tablets, and smartphones, in addition to big-screen TVs.
- fuboTV does not require you to buy or lease bulky set-top boxes, add new controls, install satellite dishes, or make arrangements to have a professional installer come to your home.
For those reasons, fuboTV could continue to gain subscribers at the expense of legacy TV providers.
Not the only one
Admittedly, fuboTV is not alone in the virtual multichannel video programming distribution (vMVPD) space, and all of the competitive advantages against legacy TV providers work in their favor as well. In the virtual MVPD market, fuboTV is competing with some heavy hitters with deep pockets in Alphabet's YouTube and Walt Disney's Hulu. Still, fuboTV has a differentiating feature in that it has a sports focus, which could allow it to carve out a niche among the giants.
And interestingly, in the first quarter when Hulu lost 200,000 subscribers sequentially from the fourth quarter, fuboTV added a net 43,000 subscribers. Additionally, while the virtual MVPD market grew by 24% in 2020, fuboTV grew by 105%. This highlights that fuboTV is gaining popularity among consumers, especially sports fans.
Therefore, fuboTV can keep growing along with an expanding market and its differentiation within the market. Investors should keep an eye on fuboTV and consider adding it to their watch lists.