The new Fox Corp. that was recently created in the wake of Disney buying the 20th Century Fox film and television studios is seeing more opportunities in eSports, sports gambling and its Fox Nation subscription video on demand (SVOD) streaming service, according to company CFO Steve Tomsic.
Asked what Fox will look like three years from now, he told Needham & Company’s Emerging Technology Conference in New York May 21 that the company’s main goals are “extracting value from what we have” and “building for the future.”
One major current goal is to renew its broadcasting deal with the National Football League (NFL), according to Tomsic. “From a basics perspective, to a certain extent, it’s the elephant in the room,” he said, referring to it as a “pesky issue” that the company hopes to be able to get out of the way. Noting that NFL Commissioner Roger Goodell was recently a guest at the company’s Investor Day, Tomsic said: “We feel incredibly well-positioned to be able to make that happen.”
The company is also looking to boost its retransmission revenue and expects to have $1 billion more of it “on the books” in three years, he told attendees.
Turning to the company’s plans to further build the company for the future, he went on to discuss how the company is creating a “more fortified business…with more than just affiliate fee income and advertising revenue being its sole way of monetizing.”
Fox has “put some stakes in the ground in terms of how we want to build this business,” he said, pointing to its recent initiatives on the sports gambling, eSports and SVOD fronts.
For one thing, Fox Sports and The Stars Group (TSG) announced May 8 that they teamed to launch Fox Bet, a U.S. media and sports wagering partnership, and that Fox bought a 4.99% stake in TSG for about $236 million. The companies signed a long-term commercial deal in which Fox Sports will provide TSG with an exclusive license to use certain Fox Sports trademarks.
The companies also plan to launch two products in fall 2019 under the Fox Bet umbrella: One a nationwide free-to-play game awarding cash prizes to players who correctly predict the outcome of sports events and the second, named Fox Bet, that will give consumers in states with regulated betting the ability to place real money wagers on the outcomes of several sports events in accordance with state laws and regulations.
The U.S. Supreme Court recently ruled that each state can decide whether it wants to legalize sports gambling.
The TSG deal will help drive consumer engagement with Fox Sports broadcasts, Tomsic told the conference, adding: “Just as importantly, it takes this vast audience that we have every day — or every night — on the network and gives us, in partnership with TSG, the opportunity to direct that audience into sort of free-to-play games or wagering product, and we can monetize that in multiple ways,” including via revenue sharing.
In addition to the equity stake that Fox has in TSG, Fox will “have an option to be able to take direct equity up to 50 percent in each one of these state-based businesses and share in the asset value of each one of these businesses” they set up for sports wagering in each state they’re licensed in, he explained.
Tomsic also pointed to the “bet on eSports” that Fox made “in the form of Caffeine” in September 2018. He was referring to Fox recently investing a combined $100 million into social broadcasting platform Caffeine and a newly-formed venture called Caffeine Studios that’s jointly owned by Fox Sports and Caffeine.
The new studio “will leverage” Fox Sports’ “expertise in live events and programming to create exclusive” eSports, video game, sports and live entertainment content for the Caffeine platform, the companies said in announcing that deal.
Describing Caffeine as sort of like “Twitch for mobile,” Tomsic said: “There’s an opportunity for us to take our sort of video experience and have that play out through sort of this mobile community on eSports…and we’ll try and gamify some of our existing assets, as well as [give] exposure” to eSports on Fox linear channels. “Over three years… we expect to see progress” on that initiative, he said.
Previously, Fox was able to “gamify” cricket games through its Star India division, he noted. As a result of those gamification features, “even if the result” of a game wasn’t in doubt because one team had a huge lead, viewers remained engaged, he said, noting there was an “extraordinary jump in terms of engagement.” Star India was acquired by Disney via its purchase of the Fox film and TV assets.
Meanwhile, the Fox Nation SVOD news service that the company launched in November is “still in its early days,” Tomsic said, but added: “We would expect that to sort of become a much more meaningful part” of the company. He declined to predict how many subscribers the $5.99-a-month service can eventually attract, saying only: “We’re very enthusiastic about the opportunity.”
Dish Network’s Sling TV over-the-top (OTT) streaming service is the only major digital service that Fox News isn’t available on now, he went on to say, declining to specify why the network is not on Sling TV. “Let’s not go there,” he said with a laugh.