During a Bernstein Thirty-Second Annual Strategic Decisions Conference 2016 session on the morning of June 1, 21st Century Fox CEO James Murdoch sat down with Sanford C. Bernstein senior analyst Todd Juenger to touch on a wide range of topics. The 50-minute discussion, which is available for replay, was an opportunity for James to talk about the importance of creating a culture that strives against its own incumbency, opening up a new wave of innovation, the importance of distinctive brands and more.
Here are some of the key quotes from the session:
On the need to improve the customer experience: “We want to really simplify [the streaming] offering and make something that’s much more straightforward for customers so they can consume the shows that they want, they can do it in a time that they want, they can find the things that they want. And that’s really important because, today, we’re not in a place where we’re competing just at 8:00 on a Monday night for the other stuff that’s on 8:00 on a Monday night. Everything we’ve put out there is competing with everything else that’s ever been made… So, when we ask customers for that investment of time, when we ask them for their attention, fundamentally we have to make sure that it’s excellent [and] that there’s an ease of use and an ease of discovery that is really in a profoundly different level than it has been in the past.”
On opening up a new wave of innovation: “[We] look at this Hulu idea and hopefully others, or Sling, etc., as stuff that can actually spur more innovation downstream. We wanted traditional MVPDs to license this way as well. We want them to launch these new services. We want them to grow. Fundamentally, you have all of these broadband-only households out there that they’re not reaching. So, rather than us sit back and say, ‘Well, that’s just too bad. There’s this macro trend — we can’t do anything about it,’ we look at it and say, ‘OK, what can we do to innovate there, to actually get growth in the pay television market overall?’… So, let’s go and create products that are out there, that are more relevant to them, that are more concentrated in terms of investment and the brands that they care about, and can be delivered at a lower price to them with a better business for us, given that it’s IP streaming and you have all those advantages and on-demand and data.”
“I often say internally to my team, to our colleagues around the company, that our single biggest risk, our single biggest competitive threat is our own incumbency, and we have to not be afraid to get out there and innovate new products into the marketplace.” |
On the threat of incumbency: “You have to be able to move forward. You have to be able to actually have a real appetite for change, not just react to it. And we see that is a core part of our culture. But I often say internally to my team, to our colleagues around the company, that our single biggest risk, our single biggest competitive threat is our own incumbency, and we have to not be afraid to get out there and innovate new products into the marketplace.”
On empowering customers: “So, customers, when you offer them a choice, first of all, appreciate it. And second of all, if you make it really easy, they come up with some surprising answers… [We] like to say you should never overestimate the customer’s satisfaction with the status quo. It’s something that’s super dangerous. Customers are pretty smart at the end of the day. So, we can provide those products that empower them, to give them a better service, and on an internet streaming environment, it’s much, much more straightforward to do that.”
On having a culture that creates more hits: “[You can always] do better, and that’s fundamentally our challenge, right? How do we – I mean, it sounds like a ridiculous thing to say, but how do we have more hits? And that comes down to: How do we have a culture where we can attract the best creators to come and work with us? How can we articulate a vision for those brands where creators want to come and do work there and do the best work that they’ve ever done?”
On advertising in a streaming environment: “In a streaming environment, you have much, much more flexibility to innovate in terms of advertising. So, to the extent that we’re able to capture customers’ attention, [we] can do that at a scale that even a lot of the internet firms and social media [firms], etc., really can’t do because they measure impressions by seconds of viewing and all – we’ve all done that comparison… [There’s] an opportunity to introduce new kinds of advertising, so you can dramatically reduce the ad loads that are there or you can even have options — for example, with our Hulu ad-free subscription service where a customer can bid for his or her own time… Trust the customer. Empower them. Given them easy tools to choose what sort of experiences they want.”
On “binging” a book vs. video content: “[If] you fall in love with a book and you read it sequentially chapter by chapter, and you might stay up late going chapter by chapter, you didn’t ‘binge’ on the book. You had a great experience loving this book, right? Internally, we call it ‘marathoning,’ which at least gives you a sense of accomplishment after 15 hours of ‘24.’ But we think that’s an incredible customer experience. It’s really straightforward. People consume what they want to consume in the sequence and in the time that they want to do it.”
On the importance of strong core brands: “[It’s] funny, I meet a lot of people who watch shows on FX, and if it’s ‘Archer’ or ‘The Americans’ or [‘It’s Always Sunny in Philadelphia’], they say, ‘I love FX.’ And it has a strong brand, and it’s fearless, it’s bold — people kind of know what they’re going to get there. In a broad sense, they’re going to get something a little bit different, a little innovative, maybe a little bit edgier. And we think that’s super important. And then I look at something like National Geographic and I say, [I’m] a parent. I have a bunch of kids and as a parent, I [don’t] want to go and put something at Netflix Kids and have them consuming God-knows-what, right? But if I had a National Geographic button there, then I could just say, ‘That, I know, is going to be OK,’ right? That’s got the Good Housekeeping seal of approval. It’s going to be fascinating. It’s going to be super high quality. It’s going to be fun for people. I think those brands are important.”
On the strength of STAR India: “We think it should make about $1 billion by the end of the decade in EBITDA. And we feel pretty good and we feel pretty good about that. We’re on track. The marketplace there is competitive, but it’s usually dynamic. It’s an entrepreneurial marketplace. There’s a huge amount of activity from our advertisers, a lot of innovation downstream. We launched this business called Hotstar, which is in its very early days, and we’re investing in that now. [It’s a] mobile online streaming business with all of the content that we produce, which is some 15,000 hours a year of content that we have there that’s very attractive in all of those different regions.”
On Sky’s fast innovation: “We think it’s a business that has a culture of rapid innovation. It’s really been growing over the last couple of years since our investment in programming and content. I think the content brands there are super strong… It’s been a real innovator in terms of things that we talk about here in the U.S. as the future — TV Everywhere, on-demand platforms, all that stuff.”
