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Fox Treading Softly on Streaming Video

7 May, 2014 By: Erik Gruenwedel

Despite generating record content license revenue from subscription streaming services, Chase Carey, COO of 21st Century Fox, reiterated caution jumping on the over-the-top video bandwagon at the expense of established revenue channels.

Speaking May 7 during the company’s third-quarter (ended March 31) fiscal call, Carey said Fox’s ability to “more deeply” monetize TV offerings in the SVOD market continues to expand with the evolving digital market place.

Indeed, Fox, which includes 20th Century Fox Home Entertainment, reported a 6% increase ($20 million) in pre-tax profit to $354 million compared with the previous-year period. It attributed the increase to higher SVOD revenue from the licensing of series to Amazon Prime Instant Video, including “24” and “The Americans,” among others.

“We certainly feel good were we are with multiyear agreements. Amazon seems to be stepping up. Hulu (which Fox co-owns with Disney and Comcast) is becoming a more aggressive player in the marketplace. We’re excited about the broader developments in the OTT space,” Carey said.

While Carey said SVOD revenue would fluctuate between quarters, the senior executive views subscription streaming as a subset of the digital market — a component he characterized as being in the first inning or two of a baseball game regarding international distribution, and in the middle innings domestically.

Specifically, Fox is eyeing greater digital control over proprietary content brands instead of licensing to highest bidder. It’s upstart cable network, FXX, last year bought the SVOD rights to “The Simpsons” for a substantial $750 million, with plans to develop its own “digital experiences” around the franchise, and other products it owns, according to Carey.

A FXNOW mobile app is slated for launch this summer when FXX officially gains access to 24 seasons (530 episodes) of “The Simpsons.” Beginning in September, FXX will have access to the 25th season of the show, when season 26 debuts on Fox.

Carey said that for Fox to partner with an OTT service, it would have to be accretive to revenue and not substitutive.

“It’s product that adds and brings new value to the marketplace. If there are opportunities, then those are the ones we want to pursue. We are going to be disciplined about it,” he said.

The COO reiterated that when the SVOD market first emerged, Fox approached it in a “disciplined way,” making sure content license agreements enlarged the overall revenue business, instead of creating products that undermined each other.

Carey said he would seek out OTT services that engage the consumer to spend more, or engage a consumer “we don’t capture today.”

Indeed, the COO appeared irritated describing a TV ad industry he said has not caught up with the shift in viewership to multi-platforms and devices.

“Today, we’re not measuring it closely enough. We’re not exploiting it closely enough. We’re not targeting well enough. To me it’s an enormous opportunity and challenge,” Carey said.

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