Why Fox Is Finally Entering the Streaming Wars

Matt Bellany discusses the launch of Fox's new streaming service, Fox One, with Pete Distad, CEO of Direct to Consumer for Fox Corp. Priced at $20 per month, Fox One offers access to Fox's broadcast network, Fox News, and Fox Sports, catering to cord-cutters and cord-nevers. Distad emphasizes Fox’s strategy to balance streaming growth without cannibalizing its successful linear TV business. The service is bundled with ESPN for $40, aiming to attract sports and news fans. Distad highlights challenges in the fragmented sports streaming market and the need for a seamless user experience.

• Fox Corporation is launching its first streaming service, Fox One, priced at $20 per month. This service includes Fox broadcast network, Fox News, and Fox Sports, which offers NFL Sunday games and the World Series.
• The service aims to attract cord-cutters and those who have never subscribed to cable, without cannibalizing Fox's existing cable subscriber base.
• Fox is doing well in the linear TV space, particularly in news and sports, and is cautious about transitioning too quickly to streaming.

"We do not want to lose traditional cable subscribers to Fox One, Lachlan Murdoch said earlier this year."

• Fox wants to maintain its strong presence in traditional TV while gradually introducing streaming options to its audience.

• Fox One targets two main customer groups: sports fans who want comprehensive access to NFL games and Fox News enthusiasts who want uninterrupted access to news content.
• The service is bundled with ESPN for $40, providing a $10 discount compared to purchasing separately, appealing to sports fans.

"To that end, Fox is also bundling Fox One with ESPN for 40 bucks, a $10 discount over what you'd pay if they were separate."

• The bundling strategy is designed to offer value to sports fans and make the service more attractive compared to traditional cable.

• Fox aims to introduce the service to new customers without disrupting its existing cable ecosystem, which is still profitable.
• The company is focused on creating a streaming experience that meets the expectations of younger, digital-first consumers who desire flexibility and choice in content consumption.

"We're going to create the best experience we can for Fox One for those digital customers. And then we're also totally fine with having the existing distributors sell the Fox product."

• The goal is to provide a seamless experience for both new digital customers and existing cable subscribers, allowing them to choose their preferred method of content consumption.

• Younger consumers, particularly college students, are less inclined to subscribe to traditional pay TV but still consume sports and news through streaming services like YouTube TV and Hulu Live.
• Fox One aims to cater to these consumers by offering a flexible, digital-first experience that aligns with their viewing habits.

"The next generation and the sort of the, you know, the 20 somethings now that are coming into being able to pay for these types of services, they want choice, they want to be able to select where they want to watch it."

• Understanding and meeting the expectations of younger consumers is crucial for the success of Fox One in the competitive streaming market.

• Fox One is positioned to capture distinct groups: sports fans who want complete access to NFL games and Fox News superfans who seek comprehensive news coverage.
• The service provides a holistic offering for news fans, eliminating the need for additional subscriptions or bundles.

"The good news is we have a full holistic news offering for the news fan, especially news fans that love Fox News. They don't need anything else."

• By offering comprehensive content for both sports and news enthusiasts, Fox One differentiates itself from other streaming services that may not provide such targeted offerings.

• The conversation addresses the need for a seamless integration of sports services for digital customers.
• Emphasis on the importance of packaging and buying experience for digital sports services.
• Experiments like the collaboration with ESPN aim to enhance the digital sports experience.

"As an industry, we need to solve the experience for the digital customer. How do you bring these services together, both from an experience perspective, but also how you buy it, how it's packaged?"

• The industry is challenged to create a cohesive experience for digital sports consumers, focusing on service integration and user-friendly purchasing processes.

• The company has set modest expectations for the growth of its new product, with a focus on long-term industry trends.
• There is a desire to avoid disrupting the existing ecosystem while aiming for growth.

"I personally would like to aim higher, but again, not at the cost of blowing up the ecosystem. I want to be careful that we're doing this the right way, but serving customers."

• The focus is on cautious growth, balancing ambition with the stability of the current market ecosystem.

• The pricing of $20 for the new service was determined based on market standards and the value of the live content offered.
• The strategy aims to create a sustainable business model without frequent price hikes.

"We wanted to price it at a number that we felt is a great customer proposition and basically a fair return for what? The amount of live content that we're putting into the service."

• The pricing reflects a balance between customer value and the sustainability of the business, avoiding undercutting existing distributors.

• Concerns about cannibalization of existing services are addressed by maintaining pricing consistency.
• The goal is to ensure the new service complements rather than diminishes current offerings.

"We're certainly not going to undercut the pricing that we give to our existing distributors. It'd be unfair to us to come in for the exact same product and sell it for less."

• The strategy is to protect existing revenue streams by aligning new service pricing with current market offerings.

• Discussions with the NFL focus on adapting to the changing landscape of media consumption.
• The NFL's priority remains broad reach, and the new service aligns with this by increasing accessibility.

"They want to have as many healthy partners as they can. So I won't speak on their behalf, but my sense is they're supportive."

• The NFL is navigating similar challenges and sees value in expanding its reach through streaming services.

• The bundle with ESPN is seen as a step towards reducing market fragmentation in sports streaming.
• The bundle offers cost savings and aims to provide a more unified sports viewing experience.

"Ultimately the problem that exists out there in sports is the fragmentation. Right. So we're just hopefully bringing the customer slightly closer to a non-fragmented sports experience."

• Bundling is a strategic response to fragmentation, offering consumers more value and a less disjointed experience.

• Bundling is also a tactic to reduce churn, as consumers are less likely to cancel multiple subscriptions.
• The approach aims to enhance consumer engagement by offering more comprehensive service options.

"It reduces churn too because the more you're subscribed to, the less likely you are to cancel if you feel that there isn't enough on one of the services."

• By offering bundled services, the company seeks to increase customer retention and satisfaction.

• The goal is to simplify the customer experience by creating holistic and complementary product bundles, particularly in sports streaming.
• Partnerships and bundling strategies are being explored to enhance the customer experience.
• The focus is on providing a seamless transition between different digital content platforms.

"We're going to continuously looking at other potential bundle partnerships over time. I think ultimately the goal is just simplifying the customer experience and getting closer to something that is giving them a holistic product."

• The quote emphasizes the ongoing efforts to streamline the customer experience through strategic partnerships and bundling.

• Discussion on the comparison between the Fox ESPN bundle and the previously proposed Venue bundle.
• The Venue bundle was a joint effort by Fox, Disney, and Warner Discovery, but it was abandoned due to legal issues.
• Pricing differences highlight the perceived value of Warner Discovery sports content.

"But what was interesting to me was that this Fox ESPN bundle is $40, whereas venue was going to be $43 and include the Warner Discovery content."

• This quote highlights the pricing strategy and value perception differences between the Fox ESPN bundle and the Venue bundle.

• The entry of the NBA into the streaming ecosystem is expected to increase fragmentation and pressure on both traditional and digital content distributors.
• Simplifying the customer experience across platforms like Peacock and Prime is crucial.
• The role of individual apps and platforms in creating a seamless user experience is emphasized.

"It also puts pressure on the digital side to figure out how do we simplify the customer experience so they can quickly figure out whether it's on Peacock or whether it's on Prime."

• This quote underscores the challenge of maintaining a seamless customer experience amidst increasing content fragmentation.

• Tubi, Fox's free ad-supported streamer, is used as a top-of-funnel strategy to upsell to Fox 1.
• The focus is on maintaining Tubi's free content model while leveraging its audience for Fox 1 promotions.
• Integration aims to avoid negative impacts on Tubi's engagement while targeting cord-cutters.

"I think if we were to try to seamlessly go in right now and integrate it, it could have a negative impact on the Tubi engagement and also probably a slightly different audience."

• The quote highlights the strategic balance between leveraging Tubi's audience and maintaining its engagement.

• Fox 1 will not have original content at launch but will focus on live programming in news, sports, and entertainment.
• The strategy involves observing audience reactions and adjusting content investments accordingly.
• Existing Fox content organizations will be utilized instead of building new ones.

"I'm not going to build a huge content organization because it turns out we have a number of them world class content organizations at Fox already."

• This quote illustrates the reliance on existing content resources and a flexible content strategy based on audience engagement.

• Plans to include local Fox stations on the Fox 1 app, allowing access to local programming.
• Initially, users will have access to local stations in their market, with plans to expand availability through fast channels.
• The strategy aims to enhance local content accessibility without breaching market restrictions.

"So what we'll have at launch is if you're in the Chicago market and we've got a local Fox affiliate, you'll get access to the linear."

• The quote outlines the initial strategy for local content availability on the Fox 1 app, focusing on market-specific access.

• The discussion centers around the progress towards a unified digital sports viewing experience that could rival traditional cable bundles.
• The aim is to make sports content more accessible and convenient for consumers by solving user experience challenges related to subscription and bundling.
• The conversation highlights the complexity and excitement in tackling the problem of integrating various streaming services for sports content.

"Well, tomorrow will be a step closer if this works."

• This quote reflects optimism about making progress towards a more unified sports viewing experience.

"Now we just need to solve the user experience challenges on how you subscribe to it, how it gets bundled, how it gets brought together."

• This highlights the current focus on addressing user experience issues to improve the bundling and accessibility of sports content.

• There is a significant challenge in getting various streaming services like HBO Max, Peacock, Paramount Plus, Amazon Prime, and Netflix to collaborate on a unified bundle.
• The ultimate goal is to provide consumers with a single package for all their content needs, similar to a traditional cable service.

"What you really need to solve is how you get your friends at Max involved at HBO Max, and how you get Peacock involved and Paramount plus and Amazon prime and Netflix."

• This quote underscores the complexity of integrating multiple streaming services into a single, consumer-friendly package.

"Ultimately that is what the consumer wants. And hopefully, if the market figures itself out, it will ultimately someday provide this to the consumer."

• This highlights the consumer demand for a more streamlined and convenient content package.

• The conversation touches on whether Paramount overpaid for UFC, with the view that it is a valuable product despite the high cost.
• The digital availability of UFC is seen as beneficial for streaming services, attracting customers who want diverse content offerings.

"I actually think it's incredible programming. I think it'll prove out over time."

• This quote expresses confidence in the value and potential success of UFC programming.

"It's obviously a lot of money, but it's a super valuable product."

• This highlights the perceived worth of UFC content despite its high acquisition cost.

• The Duffer Brothers, creators of "Stranger Things," are moving from Netflix to Paramount with a lucrative nine-figure deal.
• The deal includes opportunities for theatrical releases, which Netflix traditionally does not offer, making Paramount's offer more attractive.
• Existing Netflix projects will continue, similar to Ryan Murphy's transition from Disney to Netflix.

"The Duffers, who famously created Stranger Things for Netflix... have done, what is it, 34, 35 episodes of television over 10 years."

• This quote highlights the Duffer Brothers' past achievements and the significance of their move to Paramount.

"This is a nine-figure deal, according to my sources, for four years, but offered them theatrical and the opportunity to make movies as well as TV for Paramount."

• This underscores the scale and attractiveness of the deal that Paramount offered to the Duffer Brothers.

• Paramount aims to leverage the Duffer Brothers for both original content and existing franchise projects.
• The move reflects a broader trend where creators seek platforms offering theatrical releases alongside streaming.
• Netflix's lack of theatrical releases might be a disadvantage in retaining top talent.

"If Paramount gets a Costco brand Spielberg, then they'll be very happy about that because that's what they want."

• This quote illustrates Paramount's hopes for the Duffer Brothers to deliver significant creative contributions.

"Honestly, the theatrical thing, like that's not going away. I know Ted Sarando's like, you're married to. That's not our model. But if you wanted to keep the duffers, maybe it should have been your model."

• This highlights the strategic importance of offering theatrical releases in attracting and retaining creative talent.