Fox not keen on D2C but Hulu-type services key to growth

James Murdoch

Direct-to-consumer services may not be a necessary part of the distribution mix for 21st Century Fox, but more control of the user experience via new OTT distribution platforms like Hulu and authenticated multiscreen apps will be “a dimension of competition that is really important” going forwards, according to CEO James Murdoch.

Speaking to analysts after 21st Century Fox unveiled its quarterly results, Murdoch said that the kind of user experience developed by Sky in Europe had helped Fox immensely. He said that the combination of distribution via Hulu – which Fox partly owns – and access via multiscreen apps that require users to have a pay TV subscription now represented 20% of primetime viewing for Fox.

He said new OTT cable-like services, including the planned Hulu streaming service to be launched next year, would offer further opportunities for differentiation.

Murdoch earlier said that distribution via new cable-like OTT services such the new Hulu offering in the US was something he was “particularly excited” about and that distribution fees on such services matched basic subscriber affiliate fees from traditional pay TV services.

However, he said, answering an analyst question, that it may not be necessary to deliver an offering that was delivered direct-to-consumer or priced independently of distribution partners’ packages.

Murdoch said there were exceptions to the rule, such as the opportunity the company identified to deliver a premium mobile video service in India in the form of Hotstar.

Murdoch said he hoped that a “closer relationship” with distribution partners, including Hulu and other OTT services, would deliver innovation around advertising, which would “positive for the business”. He said that advertising opportunities delivered via new OTT services could be “much greater than via legacy infrastructure”.

21st Century Fox posted first fiscal quarter revenues of US$6.5 billion, up from US$6.1 billion a year ago. Net income was US$888 million, up from US$737 million. Revenue growth reflected higher affiliate and advertising revenue and higher content revenues from filmed entertainment.