Lionsgate Eyeing Consumer-Direct Movie Option While Pledging Loyalty to Theatrical

With studios increasing distribution of select titles direct to consumers in the home while theaters remain largely shuttered worldwide, Lionsgate has dabbled in the PVOD window, releasing I Still Believe to consumers just weeks after its March 12 theatrical debut.

On a May 21 fiscal call, Joe Drake, chairman of the Lionsgate Motion Picture Group, was asked if the studio would consider distributing titles directly rather than through third-party platforms such as iTunes, Google Play, Vudu and Amazon, among others.

Drake, who said Lionsgate remains bullish on the theatrical business model, said the D2C concept, like a lot of the distribution status-quo during the COVID-19 pandemic, is being analyzed and tweaked, while remaining in solidarity with the theatrical window.

“One of the things [Lionsgate] prides itself on is being flexible and agile,” Drake said. “We still believe theatrical is a big driver of our business, and will continue to play aggressively in that space.”

Lionsgate’s first theatrical release is slated for Aug. 21 with horror film Antebellum.

At the same time, the executive said that when the studio sees an opportunity for distributing a movie direct to the consumer, it won’t hesitate. Drake didn’t directly answer whether that would include bypassing existing transactional VOD platforms in favor of Starz or another proprietary platform.

Lionsgate currently releases about 30 movies a year through digital channels, a strategy Drake said the studio would expand, but not at the expense of exhibition partners.

“I don’t think any company has done a better job exploiting niches and opportunities with audiences, and we’ll continue to do that,” he said.

Separately, Lionsgate said it is actively working with credit card companies such as American Express to include free Starz OTT service as part of a promotion. The studio/distributor currently has a Redbox promotion by which new Starz subscribers get nine free one-day kiosk disc rentals at a $5 monthly fee for 90 days.

“We think some of [those] consumer bases [with Redbox] overlap. We think there’s a great partnership there. We’ll continue to talk to almost anybody,” said Kevin Beggs, chairman of Lionsgate Television Group.

Lionsgate expects to generate upwards of 15 million combined Starz OTT, StarzPlay, Spanish-language Pantaya and StarzArabia subscribers by the end of the fiscal year. It ended the quarter with 10 million.

Starz Adds 400,000 Q1 Members, Tops 4.4 Million Subs

Starz added 400,000 domestic streaming video subscribers in the first quarter, ended June 30, to finish the period with 4.4 million members since launching in 2012.

It was the $9 monthly Lionsgate-owned OTT video unit’s best-performing quarter in terms of sub growth.

Total Starz sub growth, including pay-TV channels and StarzPlay internationally, increased by 2.6 million to 26.5 million, which includes 24.4 million domestic subs.

As a result of the sub growth, Lionsgate’s Media Networks division increased revenue 4.9% to $372.4 million.

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Segment profit for Starz Networks increased 3.4% to $103.7 million, which was offset by ongoing content investment in StarzPlay.

Indeed, overall Media Networks profit declined to $60.6 million from $88.5 million in the previous-year period due to content costs.

On the fiscal call, Starz COO Jeffrey Hirsch defended the SVOD service’s subscription price as Disney readies less expensive $6.99 Disney+ service on Nov. 12.

“If you look at the history of Starz, we’ve always been a premium, add-on television,” Hirsch said.

Lionsgate’s global expansion of Starz has resulted in the development of an additional 20 episodic programming projects, according to Kevin Beggs, chairman of the media company’s TV group.

Beggs dismissed Netflix’s headline-grabbing mega production deal with “Game of Thrones” creators David Benioff and Dan Weiss, contending Lionsgate doesn’t chase those kinds of deals.

“For writers and directors who are overperforming, there’s always been an unbelievable upside the way we structure our deals,” Beggs said, alluding to Lionsgate’s practice affording content creators with multiple compensation options, including backend unavailable at Netflix’s business model.