Hulu at its upfront event in New York Wednesday morning confirmed it was working on the new service, and Fox said its participation with Hulu will establish a precedent for working with other distributors.
“We can license similar consumer services and products to new entrants and established MVPDs, encouraging and enabling innovation downstream, creating a distribution infrastructure that allows us to monetize more effectively and all the while grow our direct-to-consumer capability,” CEO James Murdoch said during 21st Century Fox’s earnings call Wednesday afternoon.
21st Century Fox owns a third of Hulu, along with Walt Disney Co. and Comcast.
To Murdoch, the digital opportunity is important to the TV business.
“Over the long term, but approaching quickly, all video entertainment will be consumed over IP streaming networks. That means that what we crate and produce is released into an incredibly competitive environment in which the customer can choose at any minute and on any device any entertainment that has ever been made,” Murdoch said..
“First and foremost we need to be making better things all the time,” he added, noting that by investing in its brands and programming “We’re positioning for success in this environment where it’s not worth making the distinction between linear and digital any more just as the walls between broadcast and cable melted away years ago.”
And while some view Hulu’s venture as a competitive shot against established distributors, Murdoch disagreed.
“Just as licencing to satellite and telcos was seen as controversial at the time, we see these new entrants paying a air price, putting together a great product for customers is going to spur growth in the overall universe of video customers but is going to make a better user experience.”
From a financial point of view Fox expects affiliate fees to be similar between new and old distributors, but that there are opportunities to increase advertising revenue in a digital environment, through increased targeting, interactivity and lower ad loads.
Executive Chairman Lachlan Murdoch said Fox preferred to call the new products “Core Bundles” rather than skinny bundles, but noted that both with Sling and with Hulu all of the key Fox TV brands will be present, including the regional sports networks.
“Sports is fresh and new in the streaming environment,” James Murdoch noted.
He also expected the broadcast network to reach deals with affiliates that will allow this to be a national product.