James Murdoch likes streaming.
As competition for online streaming viewers intensifies with new services, the total number of consumers getting their entertainment from digital platforms will grow, helping to offset declines in subscribers to the traditional pay-TV bundle, the CEO of 21st Century Fox (FOXA) said Monday at the UBS Global Media and Communications Conference.
Coming on the heels of AT&T's (T) launch of DirecTV Now, Murdoch said other digital streaming services are certain to emerge in addition to Hulu, part-owned by Fox, which is scheduled to introduce its online multichannel platform early next year.
"We think the television consumption model will be growing," Murdoch said at the midtown Manhattan conference. "So while we've been hammered about the decline in domestic subs, the penetration rate of these new products is still quite low, so as those rates increase they can drive growth."
Fox, like all of its rivals except for CBS (CBS) , are a part of multiple new digital streaming platforms that are gaining subscribers as the overall number of pay-TV subscribers -- both cable and satellite -- continues to slip, though not nearly as fast as some had forecast a few years ago.
Nonetheless, Dish Network's (DISH) Sling TV is said to have attracted about 1 million subscribers since launching nearly two years ago, according to Parks Associates, a Dallas industry monitor. Fox is on Sling TV as well as Sony's (SNE) PlayStation Vue and DirecTV Now, which began operation last Wednesday.
In addition to Hulu, Murdoch said competition is likely to intensify with "potentially new players that are out there," echoing comments made last week by John Martin, CEO of Time Warner's (TWX) Turner Broadcasting System unit, who acknowledged in an interview with Recode that Amazon (AMZN) was among those interested in launching a multichannel streaming platform.
"The streaming environment is a better environment for consumers because the experience is much better," Murdoch said. He noted, though, that it has advantages for content producers as well. "How we monetize the content in this environment is completely different going forward than it has been in the past."
The ability to better tailor advertising to specific viewers is one aspect of digital streaming that Murdoch said will help to increase revenue from these new platforms.
Yet Fox, Murdoch said, isn't likely to launch its own direct-to-consumer platform in the manner of CBS All Access, which recently surpassed 1 million subscribers, or HBO Now. He cautioned investors not to expect that such services can continue to grow at the same pace as in their first year or two of operation. Additionally, he said, managing such platforms requires dealing with consumer complaints and the unevenness of subscriber demand.
"I'll be curious to see what the subscriber numbers are for CBS All Access and HBO, etc.," he said. "Because as you know we have a lot of experience in the direct-to-consumer business, and it's super hard, super hard managing churn, managing your customer base, which has a different level of expectations when they give you their credit card. Right now, we're very focused on growing the overall business."
Fox shares Monday morning were up 2 cents to $27.42.