While traditional ratings decline, 21st Century Fox says it is seeing big gains in non-linear and advanced advertising revenues.
Company executives added that they think the pay-TV bundle remains the best value for consumers, but that it is looking at new ways to package programming, including direct to consumer products.
Speaking on the company’s earnings call with analysts Wednesday, CEO James Murdoch noted that less than 50% of the viewing of the company’s entertainment programming is live. A shrinking percentage is being watched on DVRs.
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With more streaming and on demand viewing going on “we’ve achieved a lot of success in terms of streaming advertising and non-linear advertising," Murdoch said.
“He said non-linear advertising was up 30% in 2017. Within that, revenue from advanced advertising products is up 40%.
“As streaming consumption becomes the primary way that people consume content, which we think will happen over time, it Is a fundamentally better ad product, and a fundamentally better platform for us to monetize these brands and these investments that we’re making, either by pricing them innovatively to customers or by creating new ad products that are priced at a premium with respect to targeting capabilities,” added executive chairman Lachlan Murdoch.
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He added that the streaming environment allows the company to create a better ad experience for customers with fewer interruptions, shorter formats and other types of ad products..
A day after the Walt Disney Co. shifted strategies to move to create more direct-to-consumer streaming video products, Lachlan Murdoch said that the pay-TV bundle remains the best video proposition for consumers.
Both Murdochs said that making sure that Fox brands were included in the core bundles of new virtual MVPDs and creating new experiences and packaging were not mutually exclusive and a direct-to-consumer offering were a possibility.
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“It’s very clear that bundling drives consumption up and pricing down. It’s a real positive for customers. It’s very much in line with trying to make our products more available and not less,” said James Murdoch.
“The downstream retail market for television is becoming much, much more competitive and that’s driving innovation both in terms of customer experience as well as packaging innovation, with some narrow bundles and some wider ones,” he said.
“We remain very open minded about an independently priced direct to consumer offering as well and we’re certainly mindful of what we’re seeing in the marketplace and we’re mindful of how these things are progressing for some other firms out there as they experiment with packaging as well,” Murdoch said.
Earlier this week 21st Century Fox’s FX Networks unit said it and Comcast would launch a premium service that for an additional $5.99 a month would allow subscribers to watch current and past FX original series on demand and ad free.
“One thing we found around the world. Constant iterations and constant innovation and experimentation with packaging is really beneficial and to be able to do that at a high pace is the best way to build our business and find the best combination,” James Murdoch said.
(Photo via FamZoo Staff's Flickr. Image taken on May 25, 2016 and used per Creative Commons 2.0 license. The photo was cropped to fit 16x9 aspect ratio.)
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