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Sports Gambling: An Angle for Sports TV Profitability

Fubo to Buy Sportsbook Vigtory

FuboTV (FUBO) will acquire online sportsbook Vigtory in an effort to attract and retain fans. Fubo plans to eventually integrate Vigtory into its TV platform and make it available to customers who do not subscribe to FuboTV. Shares of the streaming platform rose over 30% on the news.

While competitors like YouTube (GOOGL), Hulu + Live TV, and AT&T Now (T) are perhaps more recognizable to the average viewer, Fubo has differentiated itself by offering more international sports than its competitors. The platform first emerged as a service that allowed Americans to watch foreign soccer games, though it now offers more complete television coverage.

During the third quarter of 2020, FuboTV had 455,000 paid customers—a much smaller count than many of its competitors. For comparison, YouTube had over 3 million subscribers in the same period. But FuboTV is growing and announced last week that it expects its total 2020 customers to surpass 545,000.

Media Firms Team Up with Sportsbooks

Fubo joins several media companies in partnering with sportsbooks. Last year ESPN (DIS) announced a deal with DraftKings (DKNG) and Caesars Entertainment (ERI) that will give its digital access to the sportsbooks. DraftKings has also partnered with Turner Networks, an arm of AT&T’s (T) WarnerMedia.

Sports gambling has been legalized in 25 US states and the District of Columbia so far and is quickly growing in popularity around the country. MGM Resorts International (MGM) estimates that if 38 states legalize sports betting before 2025, the industry will be worth $13.5 billion.

The Price of Sports Content Rises

Live sports tend to be the most expensive type of content for TV networks. To offset the costs of providing sports programming, some online-TV providers have raised their subscription prices. Others have opted to remove certain channels from their lineups. Other companies have bowed out of the online TV-streaming market altogether after facing profit-generation difficulties. Sony (SNE), for instance, has abandoned PlayStation Vue, which was a bundle of TV channels offered through its video game consoles.

Given the intense competition and high production costs, some skeptics are wary of Fubo’s sports strategy, as more complete coverage is available from big providers like Comcast (CMCSA) and AT&T. But others say Fubo may be attractive to customers who want to watch sports and are looking for a less-expensive alternative to traditional pay-TV.

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