Why ESPN, Fox Don’t Want Their New Streamers to Be Huge Hits

Fox stayed out of the streaming wars for years. Now it’s jumping in with Fox One, its $20-a-month service that launches August 21.

But if you’re going to wait until years after everyone else to start streaming, you probably have pretty big ambitions. Right, Lachlan Murdoch?

Nope!

“Our aspirations for Fox One subscribers are modest,” the Fox CEO told investors on Tuesday, adding that the company will be making a “measured investment” in the service.

Translation: Please don’t make too much of this.

OK. What about Disney, which is finally launching its ESPN streamer for $30 a month in the next few weeks?

Disney holds its quarterly earnings call Wednesday morning, so we’ll have to wait until then to officially compare hype levels. But my educated hunch is that CEO Bob Iger will also go out of his way not to over-promise the prospects for that service: When ESPN unveiled its years-in-the-making launch plans in May, it was at a very low-key event, devoid of almost all glitz.

The difference between these launches and the ones we saw at the beginning of the streaming wars, six or seven years ago, is quite striking. Back then, big media companies rolled out new services with a galaxy of high-wattage stars, and tripped all over themselves to explain how much they were spending to catch up with Netflix. New subscribers would pour in by the tens of millions a year, they promised. And yes, they’d lose a bunch of money along the way.

But if you’ve been paying attention to the streaming business over this time, the change is quite understandable.

Back in the early days of streaming, media companies thought Wall Street would reward them if they copied Netflix’s “grow like crazy, figure out profits later” strategy. Instead, investors decided they didn’t want growth at all costs, and pushed streamers to run their businesses like … businesses.

Which is partly why Murdoch reminded investors Tuesday that Fox One will be very cheap to launch, since there’s nothing on the service that isn’t already on existing Fox-owned channels.

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But the other part of the messaging reflects the other reality at Disney and Fox: They would both like people to buy streaming services from them — but only if it doesn’t cut into their old business of selling cable TV subscriptions.

That’s because while cable TV is dying — (Would you like to buy a cable TV network? Make an offer!) — it still remains very profitable for the companies that sell it.

That’s why both ESPN and Fox officials take great pains to explain that they don’t think the services they’re selling will convince a cable TV subscriber to cut the cord. Instead, they argue, this is for people who don’t already have pay TV.

This isn’t subtext. It’s right out in public.

“We do not want to lose a traditional cable subscriber to FOX One, and we’re doing everything we can to make sure, as much as humanly possible, that that’s the way we market, and that’s the way we plan the business,” Murdoch told investors three months ago.

You can also see the needle-threading in the pricing for these services: In the past, new streamers launched at $10 a month or less, hoping to grab lots of market share. Now, Fox and Disney are coming in at double and triple that, at least in part so that they don’t undercut the pricing of much bigger bundles sold through traditional cable.

So who might actually buy this stuff? We’ll see. ESPN’s service might appeal to college football fans, since the service has deals to show lots of games from marquee teams and leagues. NFL fans may be a little more frustrated, since ESPN will only have a slice of the season’s games.

And as for Fox One: In theory, you might have people signing up to get Fox’s weekly lineup of NFL games. But it seems most likely that the service is meant primarily to appeal to “people who like Fox News but either don’t get cable or want to ditch cable and just get Fox News.”

If it’s the former group, Murdoch will be happy. But if it’s from the second …