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Although there continue to be technical challenges in delivering live streams of TV programs to thousands of viewers at the same time, Hulu is working hard to overcome them ahead of the coming launch of Hulu’s live streaming TV service, according to 21st Century Fox CEO James Murdoch. In an earnings call for Fox’s second quarter (ended Dec. 31) on Feb. 6, Morgan Stanley analyst Benjamin Swinburne pointed to the technology challenges that have been seen with live streaming on the Sling TV and DirecTV Now over-the-top (OTT) services. He asked Fox how confident it was in Hulu’s virtual digital multichannel video programming distributor (DMVPD) service being able to “come out of the gate and be robust from a product offering scalability perspective.”

In response, Murdoch said Hulu and Fox have been “very, very focused on how do you solve some of the challenges in streaming, particularly when you have a lot of concurrent streams.” As a result, he said, “I think we’ve seen really, really good progress in terms of our ability to stream concurrent streams of live sports” and “high-volume entertainment programming.” The team at Hulu is “working very hard on making sure that that experience for customers is as good as it possibly can be” when the OTT service launches soon, he said.

Murdoch conceded that “you never rule out teething problems” with a new OTT service because “some of these problems in streaming — particularly concurrent live events when everyone’s logging in at the same second — [are] non-trivial.” But he added: “We have a high degree of confidence in the Hulu platform, in the team there, [and] their ability to deliver really a ton of minutes of streaming across their subscriber base” at the same time.

Some of the technical issues that have been seen with existing OTT services over the past few months are “normal for new services and certainly we expect those kind of kinks to be worked out,” Murdoch went on to say. The technical challenges are significant, but “surmountable,” he said, projecting the Hulu OTT service experience is “going to be pretty good.”

Murdoch declined to comment on whether he expected Comcast’s NBC Universal TV networks will be included on the Hulu OTT service at launch. Although Fox owns about a 30% stake in Hulu, he said: “The matter of Hulu’s negotiations with third-party providers and content owners is really for Hulu and one that they engage in and we don’t.”

The fact that a deal with Comcast for NBC Universal networks hadn’t been announced yet was glaring. After all, Comcast/NBC Universal also owns a 30% stake in Hulu, as does Disney. Time Warner’s Turner Broadcasting owns about 10%. Deals were already announced for Disney, Fox and Turner to be included in the new Hulu service. (https://www.mesaonline.org/2016/11/01/disney-fox-on-board-for-hulu-streaming-service-mesa/) Hulu even announced a deal with CBS in early January.

But Murdoch said the Hulu team was “very focused on putting together a package of programs and brands” for the new service that are “going to really work for the customers and they’ll make those decisions as that commercial negotiation kind of plays itself out.”

He also told analysts that Fox, “within the next few months … will be rolling out a major overhaul of our streaming apps” in the U.S. The enhancements will “deliver a step change for customers and future customers in quality, in discovery and in engagement,” he said.

The “full suite” of Fox channel brands was included in DirecTV Now’s November launch and “we expect the full suite to be included in a wave of emerging DMVPD services,” including Hulu’s that “launches in the next couple of months,” Fox executive chairman Lachlan Murdoch said earlier on the call. He added: “These agreements with both established distributors and new entrants move us forward on another strategic priority: driving a more compelling user experience for our customers.”

Despite the growing number of OTT live streaming TV services, that market is “still very, very nascent,” James Murdoch said. That said, however, he told analysts that Fox sees it as a “big opportunity.” He added that the “proliferation of downstream competition is really, really healthy for content creators and for brands like ours that are robust, that are differentiated, [and] that can really deliver content that works for customers.” That “proliferation is going to be a positive thing for our business and we do believe that it can reverse some of these overall declines in subscriber trends” that have been seen, he said.

Fox shares were trading 1.16% lower at $30.36 in afternoon trading Feb. 7. Although the profit it reported for the second quarter was stronger than analysts expected, revenue came in lower, hurt in part by a decline in its film business.

The Company reported income from continuing operations of $857 million 46 cents a share), up from $674 million 34 cents a share) a year earlier. Film revenue slipped to $2.27 billion from $2.36 billion a year earlier. But cable network programming revenue grew to $3.97 billion from $3.70 billion, while TV revenue increased to $1.92 billion from $1.72 billion.

The TV business benefited from sports-related advertising — especially related to baseball – and political advertising, Pivotal Research Group analyst Brian Wieser said in a research note. The decline in film revenue was “not as bad as we expected given the lighter film slate” that Fox had compared to last year, he said. He warned that the film studio will “face difficult comparables” in third-quarter results due to the strong performance of ‘Deadpool’ theatrically and the DVD release of ‘The Martian’ last year. But he said “we retain our positive outlook on Fox at this time.”