FuboTV confirmed that it is experimenting with a three-month commitment for new subscribers, a move that could help the sports-focused OTT-TV service keep churn in check, at least in the near-term.

FuboTV's service starts at $64.99 per month, but new customers will need to make a three-month commitment requiring them to front almost $195, Phillip Swann at the TV Answerman blog first reported over the weekend.

Figure 1: According to preliminary results, FuboTV expects to end 2021 with more than 1.1 million paid subs. Pictured is the service on a Vizio SmartCast TV.
(Image source: FuboTV)

FuboTV characterized the move as a "temporary test," and has not announced when or if it intends to end it, revert back to its original one-month model, or perhaps shift to a new model that provides new customers the option of starting with a one-month plan or going with a multi-month prepaid commitment.

But the experiment does enter the picture as FuboTV and other virtual multichannel video programming distributors (vMVPDs) all face exposure to churn levels that generally are higher than those of more traditional, contract-based pay-TV services. The no-contract approach among vMVPDs makes it easy for consumers to surf from one service to another.

A temporary experiment or a sign of change?

Industry analysts wonder if that sort of churn is a particularly problematic for a sports-focused service such as FuboTV. Its prior model made it easy for sports fans swoop in to catch a live sporting event, then cancel service when it's over.

FuboTV has probably done some homework on the topic and discovered that there's a niche group of "serial churners" who subscribe for individual sports matches, Brett Sappington, VP at Interpret, said. A three-month commitment might help the service keep that trend under control.

"I think it's interesting that they are coming out with this just before the Super Bowl happens, and they probably have a niche group that is churning for a very short period of time," Sappington said.

Meanwhile, TV coverage of NCAA men's basketball tournament is just around the corner. "This is a sensitive time" for a sports-focused service like FuboTV, Sappington added. "It's no accident they're testing this now."

Recent data from Intepret's "VideoWatch" research suggests that FuboTV subscribers are more likely than consumers overall to subscribe to a new service and then cancel once they have watched the content that they wanted.

Colin Dixon, founder and chief analyst at nScreenMedia, views the three-month commitment as an interesting choice, as it will give FuboTV a longer window to get the service more integrated with the customer's regular viewing habits.

"When I talk with service providers, they often tell me if they can get people to stay past three months that they end up staying a lot longer," Dixon said.

And while FuboTV might be able to generate more valuable and loyal customers with this test, Dixon also warns that the steeper financial commitment could also slow the pace of new subscriber signups.

"I think it's a little risky not allowing people to sign up for one month at all. People are much more averse to long-term commitments" amid the array of no-contract streaming services that are on the market today, Dixon adds.

In preliminary results announced last month, FuboTV said it expected to end 2021 with more than 1.1 million paid subs – ahead of prior guidance of between 1.06 million and 1.07 million. Those prelim totals suggest that FuboTV added at least 155,395 paid subs in Q4 2021, beating the 92,800 it added in the year ago quarter.

Sappington notes that FuboTV's test for new subscribers does present some risk with respect to how consumers perceive the service. "Any time you provide some reason for consumers to feel like they're stuck in a subscription, that really harkens back to the old way that pay-TV providers do business," he explains. "The question is: Can they avoid that perception?"

Sappington isn't ready to say FuboTV's test is a sign of the times for the rest of the vMVPD market, holding that any streaming service would not make such a decision casually.

"My suspicion is that virtual MVPDs are sensitive to churn, but they are also sensitive to the possibility they'd make a change that would alienate new subscribers," he said.

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— Jeff Baumgartner, Senior Editor, Light Reading