fuboTV, Inc. (NYSE:FUBO) Citi’s 2023 Communications, Media & Entertainment Conference Call January 4, 2023 12:15 PM ET
Company Participants
David Gandler – Chief Executive Officer
John Janedis – Chief Financial Officer
Conference Call Participants
Jason Bazinet – Citi
Jason Bazinet
All right. Good afternoon. I’m Jason Bazinet, Citi’s Media and Entertainment Analyst. I’m very pleased to have David Gandler and John Janedis of FuboTV, CEO and CFO, respectively. I should have said that. Welcome, gentlemen.
David Gandler
Thank you.
John Janedis
Thanks for having us.
Jason Bazinet
Yes, absolutely. I have got some questions that I am going to ask, and if anyone in the audience would like to ask a question, just — please make sure you hit the button and we can have your question over the internet [ph] otherwise it will be a one-sided conversation [ph].
Well, I just want to start with like a real simple question in terms of competition. I mean if I’m a consumer, what would you describe as the set of attributes that would cause the consumer to say, I’m picking fuboTV over something else that might be out there in the marketplace?
David Gandler
This is actually very good question. One, I think that can be answered sort of in 3 buckets. One is on brand. We have positioned ourselves many years ago as a leading sports platform. We have 50,000 sporting events on Fubo. On the second bucket, I would say it’s product differentiation. We were first to market with capabilities like 4K. We’re the only service that has a perpetual DVR. So you can save your famous moments from World Cups of past or Super Bowls, etcetera.
We have features like Multiview which is one of the most talked about features. And then on the content side, we also differentiate with, we just recently announced our deal with Sinclair. We have, I believe, the largest — or the greatest number of local sports networks in the market. So those are sort of the 3 vectors, I think, in which we truly differentiate. And all of this is supported by our — the recognition we received from J.D. Power with the highest customer satisfaction. So product, technology and brand in short.
Jason Bazinet
And when you say local sports, we should think RSN?
David Gandler
Regional sports, correct.
Jason Bazinet
Okay. Got it. Perfect. That’s great. And then how do you see Fubo role sort of changing over time? Is it just a function of these attributes that differentiate you in sort of getting that to resonate with the consumer and sort of taking share? Or are there other sort of bells and whistles or attributes that you see unfurling in the next 2 or 3 years?
David Gandler
Yes. I think most people don’t recognize the value of our technology stack. I mean we are truly a product and technology company first. We don’t just deliver a video to you and collect your money and call it a day. I mean I’ve mentioned some of the capabilities we’ve focused on. We have a proprietary technology stack. We are very focused on artificial intelligence. We are releasing a 3.0 version of Fubo that will be tested first in France, at Maletak which is a very similar service to Fubo in the French market. So I think over time, we’re going to continue to be a sports-first cable TV replacement service. That is what we are. We aggregate content. I think that aggregation is probably the key to success in the media landscape. We’re going back to where we started. It’s become clear that churn levels among plus services are continuing to increase. People are starting to deal with switching fatigue, their inability to discover content.
And I believe that young companies are around to solve real problems. And this is a problem that I think we’ll be solving in the streaming space. So that’s sort of our positioning. And then beyond that, I would say the type of platform we’re building will really allow us to scale out globally in markets where you have a lot of local media companies that aren’t able to derive value from the streaming side, in the same way that we think we’ve provided significant value in terms of revenues for our media partners.
Jason Bazinet
Do you see sort of — I think you can correct me if I’m wrong, please. Verizon was talking about its role in terms of sort of bundling mobile services with these apps and sort of presenting sort of the wireless offering with sort of just whatever it is, Netflix or whatever. Is there a role for Fubo there to sort of take your, sort of, digital linear experience and augment it with apps in a way that can play a role?
David Gandler
Well, that I think is probably the most important piece of what we do. We are spending an enormous amount of energy getting people to stay on the platform for 100 hours. So if you think of Netflix as sort of the gold standard, I bet that people are spending maybe 30, 40, 50 hours a month on Netflix. So at 100 hours and 2 billion-plus data points that we collect, our ability to run hundreds of AV tests simultaneously, all of these things allow us to better understand our customers and to offer services.
And one of the things I would say, the most valuable pieces of why the platform is so valuable is that you’re actually amortizing the cost, your acquisition costs when you’re able to add more services. So I think what you’re saying is extremely true. Obviously, that starts with adding first the content. We attempted to do this, I’m sure there will be a question around this, gaming side as well. But I do anticipate that there will be opportunities for us to add advertising, for instance, capabilities such as if you’re watching an ad for Buffalo Wild Wings, for instance, would you be able to order online given all the information that we collect.
So there could be some, I would say, commerce point. There could be more content that we’re offering on an a la carte basis. And there could be other services that we can run on the back end as well, just given the amount of value that we’re creating. So certainly likely scenario.
Jason Bazinet
Okay, that’s cool. So maybe I can dig into just the advertising opportunity itself. And I think there’s sort of a well understood, sort of, split between what the content provider would get in terms of ad inventory and what the traditional cable satellite telco provider would get in terms of inventory. But if I remember and John, you can correct me if I’m wrong. I always seem like the ability of the distributor to sort of monetize the advertising was already always sort of impinged a bit because either there weren’t enough local advertisers to fill up that demand or they couldn’t stitch together enough aggregate, they couldn’t aggregate all that local stuff to sell a national spot. How does advertising sort of — and that opportunity fit into your overall strategy?
David Gandler
Buying sort of the stage strategy?
Jason Bazinet
Yes.
David Gandler
Yes. So setting the stage, I’ve been in media my whole life. And so I have worked in everything from local broadcast television and local cable. So I’ll tell you some very interesting differences between what we do and what the old cable model is. So one is you may be aware that cable companies had head ends where they would carry — I think you can only advertise at the time that I was doing this was on 40 networks. So there’s a limited amount of inventory that you can actually insert into. Now that barrier is gone. We can have an infinite number of networks which as you’ll see from most recent news, we’re continuing to add more channels. Two reasons why we’re doing that. One is…
Jason Bazinet
Sorry, just apart ask, you mean free ad supported?
David Gandler
Yes, free ad supported television channels, right? One is because we have infinite capacity, we can actually monetize every available second. That’s a very important component of why we think we can take our advertising revenue per user at ARPU to, call it, $15 plus, right? Again, looking back at the cable industry, they seem to have averaged in the $8 to $10 range with real significant limitation. So one is the number of head ends becomes infinite. The addressability those capabilities allow us to actually drive higher CPMs. And the fact that we can actually sell it, these are one-to-one ads, right, versus just a broadcast ad. And so there’s a greater pool of advertisers that we can talk to.
And I think the most interesting component of sort of advertising moving forward is that the local advertising base if you will, or the regional base is now getting access to self-serve platforms. So they can also participate in programmatic which we have yet to see. So all of this allow us to really tap into as — call it as a cable replacement service, more networks, more capabilities, infinite number of fast channels, if that’s something that we choose to do and a more inclusive base because they have more access to technology. So from my perspective, this makes it really — and the last piece is because we’re still heavy on sports. So you see higher CPMs.
John Janedis
Yes. I would add a couple of things to that. One would be just simply in terms of our ad stack and our sales team. And I would say 2022 or last year was a year of heavy investment in both the team and also in terms of our ad capabilities. To David’s point, we have been historically heavily programmatic business. We have invested with a lot of sales more people in terms of sales team. We’ve doubled the sales of our sales team. The CPM from direct sales relative to programmatic is materially higher, so there should be a CPM tailwind from that.
As it relates to CPMs more broadly, I think that we’re priced well in the marketplace. And so we’ve historically said we’re calling the kind of low-ish 20s on a roll-to basis. I think there’s an opportunity to take the tail higher which then pushes the overall CPM for the overall platform higher.
Jason Bazinet
Tail, meaning the lower end?
John Janedis
At lower end. Yes, exactly, yes. And then I would also add in terms of your comments before around the fill rate, I think we’ve been doing a lot of work on fill. And fill has, I’d say we’re not always fully sold out but I’d say the fill rate has been improving over the course of the year and we think that has legs to it as well.
Jason Bazinet
And the fill rates improving because of the sales force investments that you’ve made or…
John Janedis
Yes, I think it’s a combination of things. David spends more time on it. So let…
David Gandler
I would say — I mean we said this publicly, I think in first quarter of last year is that we needed to make more investment, been greater investments into the technology — the ad technology side. And we said that those investments would pay off in the back half of the year. Again, just going through our earnings Q3 numbers, you’ll see that, that is exactly what’s transpired. And then, I believe John provided commentary around what we were saying during our earnings call in terms of fourth quarter numbers and we felt really comfortable that we were able to continue down that path of strong revenue into the fourth quarter despite all the uncertainty that everyone else has been talking about.
So I think the investment in technology and sales force — I’ll just add one thing to what John said about sales force. Yes, we’ve doubled our sales force. But again, coming back from cable, I can tell you, it’s not hundreds of people. We’re talking about tens of people. So it won’t have a material impact on our cost structure.
Jason Bazinet
Okay, that’s great.
John Janedis
That’s right. And to David’s point on that front, we’re highly focused on the cost side from the sales resource perspective, that is a largely commission-based or as opposed to adding fixed cost.
Jason Bazinet
Right. And that $15 per number per user per month in advertising, that’s sort of an aspirational long-term goal or is that something…
David Gandler
Well, I come from the ad business, so I don’t like to say it’s aspirational. I think it’s a doable number. Obviously, this is a longer-term number. I think if you back into where we are — we’re sub-10, okay but well ahead of kind of where we were just 2 years back.
Jason Bazinet
That’s great.
David Gandler
So again, just the reason why I provided you the backdrop of where cable altered is because that should give you a baseline for what the ad revenue per user was in a platform that has significant limitations.
Jason Bazinet
Got it. Makes sense. A couple of the other management teams that have come through here and talked about it, they sort of say, everyone has been talking about this recession since March of 2022. And outside of digital media, we haven’t really seen, so far, a lot of real disappointing ad numbers. But everyone on the buy side is just waiting for when the shoe is going to drop. Do you guys have a view, either a macroeconomic view or things that you’re seeing on the ground that would make either more or less cautious?
John Janedis
I don’t know that I have a pure macro view. I mean, I read a lot of the same things that you and your clients read. And so — like when I talk to our sales team around, call it, the macro that is affecting us, what I hear is that the marketplace is for the most part hanging in there. And look, to David’s comment earlier, I think that maybe we’re a little bit positioned different, right? Meaning mostly live, 90% plus live, 96% or so of our subscribers are sports enthusiasts. As you know, that tends to hold in better when things are softening up a little bit or there’s macro concern. And we also have a heavy news viewership which I think has also been holding in better. And then I would also say, adding back to my comment before, having a little bit more in terms of direct sales has also buffered us, I think, to maybe some of the macro headlines that we’ve seen out there.
To my comment on the third quarter call, what I said at the time was that we saw a sequential improvement in our year-over-year ad growth from July and August to September. And then I think what I said was that we continue to expect solid growth, double-digit growth in the fourth quarter. And I think we feel — I don’t have the numbers yet, given that it was wrapped up. But I think we felt pretty good through earnings that the fourth quarter was shaping up well. Have I asked about, say, cancellations among other things, just to see what things feel like, I would tell you that from a cancellation perspective, we’re really not seeing much maybe like 1 or 2 related to supply chain as opposed to macro.
Jason Bazinet
All right. That’s good. And can I ask some clarifying questions on that 90% of your viewing hours are live. Is there a way to frame that, either in terms of what you think live viewing is for someone that has a traditional cable package or telco package today? And what is — I’ll just start there. Like do you guys feel like you’re massively over-indexing at 90% or if I just had a chart of subscription or an [indiscernible] subscription.
David Gandler
No, I mean — I think in my opening comment, I said we’re a cable replacement service, right? And there’s a value for this type of service. And so I think if you were a cable customer, you’re looking for a similar experience, you have channels that you enjoy, whether it’s ESPN or Fox News or whatever that you watch. So I think that’s the type of service that people are looking for from us. Netflix, obviously, it’s been viewing. So you’re going to see that. But on the ad side, I just wanted to also clarify, demographically speaking, we skew younger than any virtual MAPD.
Jason Bazinet
Really?
David Gandler
Yes. So we are sort of, I would say, core users 18 to 49 but we skew closer to sort of that 40, 41 years old. So that’s a very important demographic skewing mail, just again, just to highlight the sports component of this. And so that’s probably the hardest to reach demographic. And so I think that we have some control over our destiny. There are lots of categories that are looking for this particular demo within premium programming. And the fact that it’s on a connected TV makes it that much more valuable. I think on the shoe-dropping side, I think what you’re going to see in 2023 is, of course, there’s uncertainty for all of us, depending on how shallow or severe the recession is going to be. But it is a self-fulfilling prophecy that when you’re a marketer and you see all these bad news, you quickly think, okay, I should probably pull back.
So I would argue that marketers are going to pull back. They’re not going to pull it out. But as they pull back, I think the requirement is going to be how do I measure attribution? So at the end of the day, the publishers or the media companies, whoever can actually demonstrate that this is working within the modeling characteristics that a lot of the CPGs or autos have, those will continue to have some budgets. So I think you’re probably last to get cut. If you will. And I think the numbers around — most recently discussed around Meta and Google losing their 50% plus market share should also give others comfort that there was actually a way to continue to drive some share. And I think that’s a really important component, because advertisers are seeing there’s probably more value outside of those 2 companies and they’ve been earning more than their fair share and have been charging more. So I think this actually is a good thing for the industry overall.
Jason Bazinet
Makes sense.
John Janedis
The only thing I would add to David’s point, right, just going back to the demo for a second, differentiating and attractiveness back to the mouthpiece. Just for reference, I think from the data we look at, call it, the peer or competitive is about 10 years older in terms of demo.
Jason Bazinet
10 year older. Okay. That’s great. So you talked about your sport-centric customer base which makes perfect sense. I’d love to just go back to sort of I understand the logic of Fubo gaming but I’d love to just go back to sort of what was it that caused you to sort of retrench from that aspiration to sort of get more involved in online setting.
David Gandler
Let me start with why we went into it. So look, the thesis is strong and it’s to your question about — or to your point around Verizon which is offering more services to people within a specific cohort makes a lot of sense because you can now amortize the acquisition cost, right? It’s like the way I think about it is if you’re an Uber customer, you no longer have to acquire a customer for Uber Eats, right? They’re already have the app downloaded; it makes complete sense. And because we’re spending upwards of what we like to say is 1 to 1.5x monthly ARPU, that’s a decent number for us to acquire a customer with, we want to be able to maximize that. And so that was the genesis of why we should do this.
So the sports-centric audience, the amount of video content we have, the increasing subscriber base that we had all made sense. And when you couple that with a macro environment that was conducive to finding efficient capital at no cost actually, free capital, then this made a lot of sense. The risk reward seemed to be where we want it to be. Fast forward 18 months later, because it takes time to sort of build out a lot of this get the licensing done, you have a rate environment that has completely flipped. I like to talk about it from a consumer perspective. I remember rates 18 months ago were in, call it, 2%, 2.5% range on a 30-year fixed, maybe just below 3%. And then when we decided to pull, we saw rates that were, I believe, either just shy of 7% or just north of 7%.
And so that and being a public company, where everyone is focused on cash flow and profitability just didn’t seem like the appropriate thing to do given our fiduciary responsibility to hundreds of thousands of shareholders. So that was really the decision. We were able to launch our service in New Jersey which was a bigger market. The 2 other markets were so tiny. It was really about trying to tweak the tech. But we have built up some strong technology and the ability to sort of combine those to the intersection of gaming and video.
We did see directionally what we were expecting to see. But typically, when you’re a smaller company or a start-up, you start to sort of tweak until you start to see the types of KPIs you’re looking for. And we were up just there. We had just launched. We had about 7 days of data, maybe. And it was pretty much what we wanted to see. Unfortunately, the macro is the macro. And you just don’t have the same luxury you would as a private company. So I do believe that what we already know and what we’ve already developed, I think there’s an opportunity to continue to sort of play in that space, albeit not directly. But we can partner with other players in the space that are looking to access a subscriber base that is 100% into sports.
And so I think that there will be a time when we can do that. Right now, we’re in sort of conversations with different players. But as I think their marketing costs continue to increase and it’s harder to reach users, I think they’ll come to us. So we’re in no rush right now to do anything but I do feel that we will take advantage of that space in due time, because we own all of the proprietary technology. And which for me has always been the reason why Fubo was so valuable is because we’ve built up all the tech. And we are able to sort of control our own destinies and develop capabilities that we think will create value for shareholders, partners and customers, of course.
Jason Bazinet
You’re totally right that the OSPs are grappling with their own free cash burn, trying to drive their cap costs down, talking about more the national ads to try and get their cost of acquisition lower. So…
David Gandler
Yes. But on a platform like ours, I mean, think about it, just kind of look at the calendar sporting event. So you have college football championships early January. So people are betting on that. Then you have the Super Bowl. So you have to go out and remind everyone, “Hey, don’t forget to place your bets,” right? Then you have March Madness. Another 3-week run where you have to remind people to go place a bet. So that most customers based on our research have 3 to 4 OSP apps. And they’re playing off the different promos. So you can, on one bet against team A and on the other one, bet against team B and you always come home with a win. It’s actually quite interesting.
So for those that understand how the promos work, you’re always making money. And so for me, when you integrate bedding, you don’t actually have to go out and constantly remind people to place a bet. They’re already in the environment. They’re in the mind frame. They are either for team A or for team B and you can actually start to leverage the casual better which is really, I think, the entertainment value that I thought we were going to be creating by continuing down this path. So there were some retentive value as well in that, so — but it’s an interesting time.
Jason Bazinet
Are there any sort of cost savings you’ve called out by sort of shutting down Fubo gaming?
David Gandler
Not directly. When we had our Investor Day back in August, we had already announced that, that business was under review. And so when we gave out our targets out to ‘25, call it, we had excluded the gaming piece of that because it was unclear where that was going to land, where we were going to retain it, where we’re not going to retain them. So the short answer is that it’s in our model in terms of the savings were already there. But again, they are not insignificant.
Jason Bazinet
Okay, all right. Okay, that’s great. So in terms of your 2025 targets, you guys pointed to expanding your ARPUs from about, what was it, $73 in ’21, was it $95, is that right, by 2025? What would you sort of give investors sort of the bullet points underneath that delta between $71 and $95 that’s going to allow you to get there?
John Janedis
So there are a couple of things I’ll start with and maybe David will fill in some blanks here. So over time, we just talked about, call it, the out-ARPU piece. And so we think there will be several dollars of that ARPU increase. And so call it $5 to $10 of that ARPU over the next 3 years but we expect to be able to take it out of the marketplace. The second thing is we intended to believe that we have pricing power. We get questions every now and again around do we have pricing power given the competitive set. And we — our most recent price up was earlier in the spring. We priced at $5 for our lowest-end package. And I would tell you that the churn is off of that was below expectation. And then on top of that, was there a talent to potential churn off of a price increase. And we’ve also said that in the third quarter, we had our lowest churn in the history of the company.
And so we think there’ll be a combination — as a result of that combination of price increase at ARPU. And then also, we’ve done a lot of testing. And David mentioned AP testing. We do a lot of testing around our different packages, right? So we have, call it, 3 packages, our Pro, Elite and Ultimate. And what we’ve been doing is preselecting these premium or higher-end packages. And we’ve also seen a good take rate on those. And so that also kind of layers in on top of that an upward pressure organically, if you will, in terms of new subscribers. I think somewhere in the range of around, I think we said a few months ago, most recently about almost half of our new subscribers are coming in at these premium plans, that will also be a tailwind. And then we have also attachments, whether it be, say, some of these premium services that are owned by some of the conglomerates that was also add to the ARPU.
Jason Bazinet
Half your new subs coming under these premium plans. Why that seems to counter intuitive given, I don’t know, all the inflation duress and…
John Janedis
Well, yes and no.
Jason Bazinet
Okay.
David Gandler
So I think the 2 things I was going to add which probably align with your question, is the nature of our program. So we are heavy sports oriented. And so when I think about pricing, I think about it on a relative basis. And so if you think about who’s left in the cable sort of ecosystem, it’s people who love sports, right? And then, if you think about other virtual MVPDs or other streaming services, there is a price ceiling because more than half of their customers are general entertainment customers. The reason why people left cable was because they didn’t want to pay. They felt that sports was causing the increases and so they wanted to leave. And here we are with Netflix today. In our situation, almost 100% of our base watches sports. So we’ve actually raised prices from — I think it was $6.99 back in 2015 to now upwards of $65, right, on the base side. So that’s one. I think that on a relative basis, we have more pricing power because again, as we add more content, our customers are saying, wow, he’s giving us more, or they’re giving us more sports for our money. So we like that.
The other thing is having everything in one place. You’re reducing the switching fatigue. People can’t find content. Amazon, Thursday Night Football, I think is the, I would say, the perfect example of why we belong in this industry. I can get into that in a second. But the second thing is that I remember when we started raising prices in like ’17, ’18, I remember people saying, you know what, I’m going back to cable. Because they were like, why, if I’m going to pay more, I might as well go back. The reality is, I was thinking about it over the break, if we had pricing parity, not saying we ever will but I’m just saying that in a theoretical scenario, if we were $120 of virtual — not Fubo but a virtual MVPD was $120. Would you ever say I’m going back to cable? That’s the question that I had. The answer is no.
So I do believe there is some pricing power there. I do believe because we’re sports-oriented, we have more pricing power. And the third thing is the Amazon point that only people that are, I would say, investors that are given Amazon the benefit of the doubt, they’ll say, well, the schedule was weak. Yes and no, the schedule was weak. But if you look at the local ratings for those same games, yes, there were several games, I think, several weeks where the ratings came in but they immediately bounced back. We didn’t see that bounce back. And so I believe that there is something called switching fatigue where, at some point in time, the cognitive load required to go into another app to go set that up, to then wait until there’s a commercial to have to bounce back out almost negates the value of actually going in. So there has to be an aggregated version of something like a cable bundle in the streaming world that has greater data and greater discovery.
So from my perspective, I think that the ability to go from 70% to 90% plus — as John stated, I think, is doable, just given from some of the things that we’re seeing on our end.
Jason Bazinet
Just hit the button [ph].
Unidentified Analyst
Right. I’m excited. So one thing I just comment on — just your last comment on Amazon. I’ll take the other side which is I think part of the reason why Amazon has Thursday Night Football is to drive Prime subs. I don’t think they care about sports, I don’t think they care about streaming. I think they care about getting people into Prime because they find that a Prime user is incredibly valuable purchasing paper towels and whatever. So, I think that’s — the motivation may be different. Same reason why they spend, I don’t know, $1 billion for the Lord of the Rings or whatever, like I think they just want to drive prime itself. That said, you now have Google throwing their hat in the ring that they want to go after sports.
And so I guess I have a bunch of questions but my main one is, when you think about the value of that sports franchise, it’s incredibly insightful the way you said Netflix was created because there’s a lot of people who don’t want sports, who don’t want cable. So that’s very insightful. First question is, now that Netflix — and I’ll throw Apple into this as well, now that Netflix and Apple have those huge installed bases that don’t have sports, why won’t they — either why don’t you combine with them? Or like why won’t they become a challenge to part with that one?
David Gandler
So first of all, I will agree with you partially on the Amazon piece, on the — I would say, on the latter point where they don’t care about sports that I will agree with you all. Where I challenge you and I will challenge anybody here or on the phone, is you tell me the last time you met a person that said, “hey, I’m getting Amazon Prime because they have the Thursday Night game.” Most people already have Amazon Prime. And if you ask anyone, I’m sure if you survey anyone, why do you have Amazon Prime, they’ll say it’s the delivery. So I’m not sure that Thursday Night Football is driving anything. Now if you would say to me, if it was a market like India or something, yes, I believe that, that is actually possible. But in the United States, there is no reason that, that game is there.
And one of the things I said in an earlier meetings is why do people invest in start-ups and how do VCs think about start-ups? Really one reason, is there a need in the market for what you’re doing? And I would argue there is no need in the market for a one-night game that is out of right field, on an app where people don’t really care. Hence, maybe the reason — I don’t want to turn this into an Amazon call. But maybe that’s the reason for the sports app. So — and then on the second point you made on Netflix and Apple. Well, I’ll start with Netflix. Netflix — so we said the reason why Netflix exists is because people didn’t want to pay higher prices for sports. I think Reed Hastings has said, “I’m not sure what we can do for sports.” Now I take that with a grain of salt because he also said I’ll never see advertising in our service, we have it today.
So my sense is it’s in a very expensive game. And to your point is that if it’s that expensive and no one cares about it and they’re all overpaying for it, then I don’t think that’s Netflix’s business. And also there I think they’re doing quite well as it is relative to every other plus service. I’m not sure that this is a necessity for them. Of course, they’re going to dabble and look at it. I mean I would argue that you should always be looking at everything in terms of video if you’re in the space. In terms of Apple, I go back to my points on Amazon. I mean, they’re an ecosystem, they want it. The question is, will you sell the 150 million in 1 device because you have sports? I think they can extract positive economics any way they want without actually having ownership. I’m not sure there’s any value that’s being created.
Look, everyone is looking for ways to differentiate today. And I think all of this is actually good news for us because the more fragmented things are, the more likely it is that people will say, again, I go to my switching fatigue point is that, you know what, I get 80% of the content in this one place. I love the Multiview, love the FanView, love the 4K, I love the discovery, I love the perpetual DVR, I love the apps, I’m in and that’s it. So I think we’re getting to a point in time where the conversation around sports moving to streaming, we were just saying it earlier, it already — it’s being streamed. It has been streamed since 2015. So it’s not like sports is going to streaming, wow. It’s really a case of like where is it most suited and most valuable.
But on the last point you made, why don’t you combine with some of these guys. Obviously, that’s not something that we talk about. I think we can be a very strong player independently over the next few years because I think the market is actually coming in our direction. There’s been a lot of uncertainty and you’ve seen a lot of changes in media over the last 18 months, as you said, YouTube picking up this peripheral NFL package. And you’ve seen other moves by other players and combining different media assets into one and pricing promos at $1.99 advertising and in Netflix, all of these things are happening relatively quickly.
But I think ultimately, we’re going to go back to where we started which was like I make money on the bundle, customers are happy, shareholders are happy. And so I’ll leave you with this comment. COVID helped companies like Peloton and Fubo and Netflix drive subs. I will say that the recession will help us in rationalizing our cost structure and helping our counterparties rationalize their businesses which, obviously, the plus world doesn’t make a lot of sense for reasons we all know: High churn, low prices, maximum output, hit rates that are below 7% for TV shows.
And just the marketing costs of having to market every single program, it’s just — it’s insane. So I think that our goal is we have a 2025 outlook that John presented and our goal is to sort of stay within that. Obviously, there’ll be some noise quarter-to-quarter but I think over the long term, we think we’re, again, positioned well relative to where everybody else is. And the type of platform we have which is platform-agnostic and completely software-driven.
Jason Bazinet
So just one final question. Of all of the 2025 goals that you guys have articulated, am I right that the street cares most about free cash flow breakeven?
John Janedis
That’s probably fair, I think to David’s comment earlier, we all haven’t talked about and you’ve written about this just in general, around the cost of capital and the need for funding, right? And so ultimately, I think, for us, getting to that air point of sub-funding in ‘25, I think is really important. And to David’s point, I think we feel pretty good about being able to get there.
Jason Bazinet
That’s great. You guys are in an interesting journey. So I wish you all the best of luck.
David Gandler
Interesting to say the least.
Jason Bazinet
All right. Very good.
David Gandler
Thanks for having us.
John Janedis
Thank you.
Jason Bazinet
Thank you, David,. Thank you, John.
Question-and-Answer Session
End of Q&A
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