Integrated gambling a bet too far for FuboTV

Live sports streaming has been one of the hottest topics in video for some time, fuelled by the growth of the likes of DAZN and FuboTV, as well as the streaming efforts of sports units of larger media groups such as Eurosport (Warner Bros. Discovery) and ESPN (Disney).

Delivering a compelling live mass-audience sports experience over IP is not a piece of cake, with DAZN’s troubles in delivering Italian Serie A football providing ample evidence of the problems streamers can run into.

DAZN and partner Telecom Italia’s failure to meet their ambitious goals for the Italian service underpinned a renegotiation of their partnership leading to this week’s agreement between DAZN and rival Sky Italia. The pair had previously been at odds, with Sky alleging that the TIM deal was “illegitimate” and the Italian competition watchdog launching a probe as a result.

The technology challenges of delivering a compelling, high-quality live sports experience are considerable. But that is not the only technical challenge facing sports streamers.

Premium sports rights are expensive, and sports streamers need to justify the considerable investment required by growing and diversifying their revenue streams. For this reason, they have long been drawn to the golden opportunity offered by real-time sports betting, integrated with the streaming TV experience.

FuboTV, the US-based streamer, over the last few years has expanded beyond sports (it originally launched as a soccer streamer for the US market) to become a virtual MVPD with third-party channels on board. The company recently acquired Molotov, the French (non-sports specific) streaming outfit to build a larger international presence.

One of FuboTV’s key strategic goals has been to build a fully integrated sports betting proposition. However, this week as it announced second quarter financials, it slammed on the brakes.

CEO David Gandler told analysts that the company had decided to enter the wagering business at a time last year then the business climate, meaning the cost of capital, was favourable to developing products with “longer profitability time horizons”.

However, times have changed. “Now, with the recent and inflation hitting 40-year highs, that no longer holds true,” he said.

Strategic review

Gandler said that the company had decided to place Fubo Gaming, its online sports wagering business, under strategic review.

“We will no longer pursue this opportunity on our own and are exploring the best path forward to scale the business. We look forward to continuing to update you as conversations progress,” he said.

While sharing the investment burden could provide a way forwards, FuboTV is not giving up on sport betting entirely. The company has acquired a licence to operate a service in New Jersey. Gandler said that the company’s existing Fubo Sportsbook mobile betting app would be launched in that state imminently, with a further launch in the near future taking the app to four states.

However, FuboTV has pulled back from launching in additional states where it hold licences.

A question mark must now also hang over the further integration of gambling with real-time streaming video.

In June, FuboTV announced the forthcoming launch of Pick’em Games, purportedly a “first of its kind” integration of live TV streaming with Fubo Sportsbook. Pick’em players in select markets would have access to Fubo Sportsbook by scanning a QR code to place real-money wagers aligned with their picks, marking a further incorporation of FuboTV and its owned-and-operated real-money wagering platform, the company said.

In its press release, FuboTV said it intended to further integrate FuboTV and Fubo Sportsbook with the launch of additional product features, including live odds, this year, subject to regulatory approvals.

With all this now on hold, it may be some time before sports and betting fans have the opportunity, for example, to place bets on imminent turns of fortune in games they are watching live. This is seen as the Holy Grail of live sports betting, but the requirement for near zero latency in the live stream and the technical complexity of integrating the betting platform – together with the long-term investment required – mean that it likely still some way off.

Of course FuboTV has not been alone in trying to integrate betting with live-streaming. DAZN earlier this year announced its own foray into sports betting in a tie-up with Pragmatic Group. But FuboTV was probably furthest down the path.

The company’s decision to review its options in any case did it no harm with investors. FuboTV’s stock rose sharply on its strong results, no doubt boosted by an approach that CFO John Janedis characterised as being “hyperfocused on our path to profitability and reducing our cash burn”.

No one lost money betting on the appeal of that.