The logic is sound enough. Cable television service has become outrageously expensive, so it makes sense that the advent of lower-cost streaming alternatives -- like Netflix -- has prompted consumers to cut ties with cable companies. The industry only exacerbated the problem by responding with more price increases rather than lowering its monthly bills. All told, eMarketer estimates nearly 23 million U.S. households have cut the cord -- presumably because of unchecked costs -- since cable's footprint peaked in 2013.

As it turns out, however, consumers may not be as averse to paying something of a premium for cable TV as once thought. fuboTV (NYSE:FUBO) is doing pretty well for itself, selling a virtual cable package consisting of 117 channels at a not-exactly-cheap price of $64.99 per month. The company boasted 455,000 paying customers as of the end of the third quarter (ending in September), and recently informed shareholders it added around another 90,000 subscribers during the fourth quarter of 2020. It's the fifth quarter of the past six the company's managed to add customers.

Perhaps there's a healthy cable television market after all, if it's the right product at the right price.

Man holding a smart TV remote in front of a television screen with many viewing choices.

Image source: Getty Images.

A pricing edge

FuboTV isn't profitable, and that's the one overarching question mark for the company. If there's no net income on the horizon, what's the point?

The company is serving up the next best thing, though. That's progress. The losses it's suffered since the service launched in 2015 are finally starting to shrink now that fuboTV has some scale. Analysts project that this year's expected 84% revenue growth will cut 2020's likely per-share loss of $5.41 roughly in half, with 2021's estimated loss being only $2.16. These same analysts currently believe the organization will swing to a profit sometime around 2024.

fuboTV (FUBO) is expected to produce positive EBITDA by 2023, and report a profit by 2024.

Data source: Thomson Reuters. Chart by author.

Doubts about the probability of that profitability are understandable. If cable powerhouses like Comcast and AT&T can't stop bleeding cable customers, how can an upstart like fuboTV expect to continue adding paying users?

The unsurprising answer is mostly about price.

As noted, fuboTV's service costs $65 per month. For a lot less money, consumers can piece several streaming options together, including the live TV broadcasts available through Dish Network's Sling TV at a price of $30 per month. At $65 per month, though, fuboTV's streaming cable service is still cheaper than comparable plans from Comcast's Xfinity Cable or AT&T's DirecTV, once all the add-on fees are factored in. Consumer Reports estimates that fees can make your monthly cable bill around 24% higher than that package's listed price. That can put the minimum monthly cost in excess of $100. For the time being these fees don't apply to streaming cable.

Fair or not, it matters.

The most marketable mix

It should also be noted fuboTV has made a point of giving its customers more of the media they want and less of what they don't.

As for what consumers want, sports is fuboTV's big draw. The company unabashedly touts the fact that it can offer consumers "live sports & TV without cable." It's also cultivated partnerships with all the major sports leagues to incorporate their premium packages, and now offers almost all of Walt Disney's (NYSE:DIS) ESPN-branded content.

And if you don't think sports is critically important to current and prospective cable customers, think again. A survey performed by Roku during the peak of the pandemic last year indicated a lack of sports was the primary reason 28% of people who cut the cord in 2020 did so. That data echoed research from MoffettNathanson Research posted in May. As Craig Moffett voiced it to The Wall Street Journal at the time, "Sports are the glue that holds the bundle together."

Obviously, a lack of sporting events didn't help sports-oriented fuboTV add new customers last year. But it certainly didn't prevent the platform from adding subscribers at a decidedly tough time for the conventional cable industry, even after fuboTV dropped less marketable AT&T (Warner Media) channels like TNT, TBS, and CNN in mid-2020.

Linear cable continues to lose customers, but fuboTV is adding them.

Data source: fuboTV and investor materials from the United States' six biggest cable names, comprising more than 90% of the nation's cable television market. Chart by author.

The bottom line for fuboTV

Were it just fuboTV picking up customers, it could be dismissed as nothing more than a curious quirk from a relatively small company that just happens to be in the right place at the right time. It's not just fuboTV, though. Disney's Hulu+Live streaming cable service has also steadily added paying customers in recent quarters by selling a decent cable bundle at a modest price point. Ditto for Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube TV.

The virtual cable industry has been able to add customers for two years, building on its lower price point.

Data source: Company investor materials and multiple analyst estimates when confirmed company data is unavailable. Chart by author.

Collectively the trend is telling us that cable can compete. It's just a question of whether cable outfits are willing and able to right-price and appropriately package the product. If they're not, so much the better for the virtual cable names.

The kicker: While it remains to be seen if sports-intensive fuboTV can actually turn a consistent profit as a cable platform, it's wisely looking for related ways to monetize its crowd. The company's making a big bet on sports wagering, for instance. On Tuesday, the organization announced plans to acquire sports and gaming company Vigtory as a prelude to launching its own sportsbook. That deal follows December's news that fuboTV would be acquiring Balto Sports, which operates fantasy sports league platforms. It stands to reason that fuboTV's wide swath of sports fans are interested in this type of entertainment as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.