Fox COO: Consumers Don't Want à la Carte Channels6 May, 2015 By: Erik Gruenwedel
Consumer consumption of television may be moving online, but efforts to slice-and-dice the traditional pay-TV bundle must be approached with caution, 21st Century Fox COO Chase Carey told analysts.
Speaking May 6 on the Fox fiscal call, Carey said consumers still prefer bundled channels as opposed to standalone video services. He said moves toward smaller customized bundles have to be done with the consumer in mind and not arbitrarily.
“I don’t think [consumers] want to buy à la carte,” Carey said. “We continue to believe that the vast majority of subs will continue to want a bundle of channels that is priced appropriately as opposed to a limited number of premium-priced channels.”
Carey said many of Fox’s TV carriage agreements preclude multichannel video program distributors from experimenting with alternative small channel bundles — such as Sling TV — without significantly changing existing pricing structures.
At the same time, Fox understands the evolving marketplace and consumer demand for on-demand and over-the-top video services — opportunities Carey said could help Fox expand its business opportunities and connect with broadband-only consumers.
He said OTT services such as Netflix and Hulu Plus (which Fox co-owns with Walt Disney and Comcast) do offer better value and consumer experience than does TV Everywhere — the authenticated on-demand digital platform media companies have heretofore failed to attract much interest from subscribers.
Carey said OTT video offers increased competition for premium content to the established ecosystem, in addition to bringing better experiences to the marketplace through improved interfaces.
While he believes content (i.e. Fox, FX, Fox News, Fox Sports, National Geographic) will be the ultimate beneficiary of new distribution models, Carey cautions that not all consumers will benefit from change. He said the industry has to resist the temptation of short-term gains at the expense of a long-term future.
“In many ways it is a time to settle down,” he said.