Starz CEO: Sony Pay-1 Output Deal Wasn’t Working for Us

Starz CEO Jeffrey Hirsch said losing Sony movies to Netflix and Disney was a strategic win for his company as “the value wasn’t there” for Starz.

Netflix and Disney earlier this year made separate sequential pay-1 output deals for Sony Pictures’ 2022 movie slate, wresting the content from Starz.

The 2017-2021 pay-1 deal between Starz and Sony was projected to generate about $1.3 billion in license fees for Sony — up about $330 million from the previous $739 million pact from 2014 to 2021. Over time, Starz apparently questioned the value of the content it was paying big money for.

Jeffrey Hirsch

Speaking May 12 on the virtual MoffettNathanon 8th Annual Media and Communications Summit, Starz CEO Jeffrey Hirsch said that other than three box office hits: Spider-Man: Far From Home, Jumanji: The Next Level and Venom, the bulk of the studio’s theatrical slate failed to resonate with moviegoers. Hirsch said box office data has always been a big deal in the pay-1 window — and what he saw from Sony wasn’t compelling.

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“About 50% of the movies coming from Sony that we were paying for made under $10 million at the box office,” Hirsch said. “And if you look at the Top 10 movies over the last 12 months [prior to the pandemic], if you take [those movies out], none of those movies we got [from Sony] were in the Top 10.”

Hirsch said that based on the Starz consumer, on a title-by-title basis, management didn’t think the value was there to extend the agreement. By comparison, the executive said that while the 15 movies Starz is getting from corporate parent Lionsgate, i.e. John Wicks, Borderland, Knives Out, etc., is less than the Sony agreement, the titles’ impact on Starz subscribers is greater.

“We, early on, went negotiating a pay-1 output deal [with Lionsgate] ahead of Sony,” Hirsch said. “We really looked at the data, and other than those three movies, we were paying for stuff that wasn’t really resonating with our consumer. For us the value wasn’t there.”

Indeed, Starz, which is owned by Lionsgate, ended 2020 with 28 million subscribers, which included 14.6 million streaming subs and 13.4 million linear subs — the latter down from 19.9 million at the end of 2019. The streaming sub service, which includes a $8.99 tier in the United States, and $5 internationally, grew almost 70% from 8.6 million in 2019.

Starz Launches ‘Lionsgate Play’ SVOD in Indonesia

Starz has launched direct-to-consumer app Lionsgate Play in Indonesia, expanding its presence in Asia following the successful launch of Lionsgate Play in India. The launch makes Lionsgate’s library of film franchises and first-to-Indonesia original series and boxed sets immediately accessible to a wide audience.

“Indonesia is an exciting market for us,” Jeffrey Hirsch, CEO of Starz, said in a statement. The large and diverse population, increased data usage in urban and rural markets, and adoption of OTT across all demographics created an opportunity for us to launch Lionsgate Play.”

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The app brings “The Hunger Games,” “Twilight” and “Now You See Me,” movie franchises, Academy Award-winning films from other studios such as The Aviator and Babel, the romantic drama Remember Me, and original television series, “Weeds,” “Power,” “Mad Men” and “The Spanish Princess” directly to Indonesian consumers.

The service launched with two subscription models: IDR 35,000 ($2.41) per month and IDR 179,000 ($12.31) for a year. Lionsgate Play content will also be made available through various bundle offerings with partners such as Telkomsel and Telkom.

Guntur Siboro, GM of Lionsgate Play Indonesia, believes that the combination of the app launch and the previously-announced telecom partnerships will bring easy access to Lionsgate Play content for the latter’s subscribers.

“The partnership allows us to give more Indonesians the best entertainment experience,” Siboro said. “With a diverse audience reach, Lionsgate Play can be exposed to various levels of society.”

Lionsgate Play Forms Partnership With Indonesia’s Telkomsel

Lionsgate Play, a South Asia-based streaming video unit of Starz, has formed a pact with digital telecommunications company Telkomsel. Under the agreement, Telkomsel subscribers will be able to access movie franchises such as “The Hunger Games,” “The Twilight Saga,” and “Now You See Me,” as well as Lionsgate/Starz TV series “Mad Men,” “Power” and “The Spanish Princess.”

Subs also have access to movies from other studios, including The Aviator and Babel, and original TV series payable through multiple data/billing options.

“We believe in giving Indonesian customers the best viewing experience with varied accessibility options,” Guntur Siboro, GM of Lionsgate Play Indonesia, said in a statement.

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Telkomsel can preview Lionsgate Play movies via MAXstream, the telecom’s video streaming software. Subs can up their movies by purchasing larger data pack purchase, beginning with MAXstream Add-on and MAXstream Gala options.

“Movies from Lionsgate Play would further accommodate the needs and demands of our customers and increase our customers’ experience in enjoying ‘#sinemaspektakuler’ content through the MAXstream platform,” said Nirwan Lesmana, VP of digital lifestyle Telkomsel.

Rohit Jain, managing director of South Asia and Networks — Emerging Markets Asia, said the agreement underscores the role telecoms are playing shaping the digital age of content.

“We are delighted to … expand Lionsgate Play’s offering of compelling, exceptionally curated premium content and a great user experience to all of our shared customers,” Jain said.

CEO Jeff Hirsch: Starz Targeting Underrepresented Audiences

Starz spent much of 2020 extricating itself from the traditional pay-TV bundle in favor of an a-la-carte business model in both the linear and over-the-top video markets. The Lionsgate-owned unit ended the year with 28 million subscribers, which included 14.6 million streaming subs and 13.4 million linear subs — the latter down from 19.9 million at the end of 2019. Streaming subs, which includes a $8.99 tier in the U.S., and $5 internationally, grew almost 70% from 8.6 million in 2019.

Starz CEO Jeffrey Hirsch

Speaking March 9 on the virtual Deutsche Bank Media, Internet & Telecom Conference, Starz CEO Jeffrey Hirsch said the company continues aggressively target underserved audiences — a strategy underscored by Pantaya, the Spanish-language sister SVOD operating in the U.S. since 2017.

“We saw a lot of increased engagement with [Starz] during the pandemic,” Hirsch said, adding the platform targets women and people of color. “People want to be a part of that.”

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Starz launched four new series during the pandemic, including season five of “Outlander”; the first season of “HighTown”; “P-Valley”; and the first “Power” series spin-off, “Power Book II: Ghost.”  Hirsch said the platform is entering its “broadest release slate” in its history, adding that originals fuel subscriber growth and retention.

Other pending series include “Run the World,” a comedy about four African-American women living and working in Harlem; second and third “Power” spin-off shows, “Power Book III: Raising Kanan,” and “Power Book IV: Force”; “BMF” (Black Mafia Family); a second season of “HighTown,”; “The Girlfriend Experience”; and “Gaslight,” a series about Martha Mitchell and John Mitchell (President Nixon’s U.S. Attorney General) before and after the Watergate scandal. The series co-stars Julia Roberts and Sean Penn playing the Mitchells.

“We’ll almost double the slate this year to around 12 originals, getting to 16 originals next year,” Hirsch said. “We feel really good about celebrating growth both domestically and internationally.”

Indeed, StarzPlay is now available in 56 countries globally, partnering with local companies such as Canal+, Vodafone, and others, with a goal to generate 15 million to 25 million subscribers by 2025, with 2% to 4% broadband household penetration in each country; with break even targeted for 2023.

StarzPlay International and StarzPlay Arabia (a joint venture with Dubai-based Playco Entertainment) ended 2020 with 4.3 million and 1.8 million subscribers, respectively, compared with 2.7 million and 1.7 million at the end of 2019.

“We are well on the way to getting there,” Hirsch said.

 

Starz Inks Multiyear Agreement for Lionsgate and Summit Label Movies

In another nod to over-the-top video distribution, Lionsgate and multiplatform subsidiary Starz March 2 announced the closing of a multiyear exclusive first window output deal for all theatrically released Lionsgate and Summit label movies when current agreements expire at the end of 2021 and end of 2022, respectively.

The agreement will bring to Starz movie franchises such as “John Wick,” starring Keanu Reeves; Borderlands, based on the best-selling video game franchise, directed by Eli Roth and starring Academy Award winner Cate Blanchett, Kevin Hart, Jamie Lee Curtis and Jack Black; White Bird: A Wonder Story, featuring Helen Mirren and Gillian Anderson in the follow-up to Lionsgate’s box office hit Wonder; Are You There God? It’s Me, Margaret, produced by Oscar winner James L. Brooks and adapted from the Judy Blume classic; and The Hunger Games prequel based on Suzanne Collins’ The Ballad of Songbirds & Snakes. Future installments of the “Saw” franchise will also be included under the deal.

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“This agreement is the next logical step in capitalizing on the combination of our two companies,” Lionsgate CEO Jon Feltheimer said in a statement. “It gives our brands and franchises an exciting new platform home, accelerates the convergence of our studio and platform businesses and will support Starz’s continued growth into one of the world’s leading premium subscription platforms.”

With 28 million subscribers, more than half of whom are streaming subscribers, Starz offers more than 7,500 premium TV episodes and feature films, including original series, first-run movies and other programming.  It recently launched #TakeTheLead initiative that spotlights a spectrum of women both in front of and behind the camera for audiences worldwide.

“Combining our strong slate of original programming focused on narratives by, about and for women and underrepresented audiences with Lionsgate’s diverse pipeline of both commercially successful and critically acclaimed franchises further enhances the value proposition we bring to our subscribers and partners,” said Alison Hoffman, President of Domestic Networks for Starz, in a statement.

“Demand for movies has never been greater, and this agreement has significant benefits for our company, our consumers and our partners,” added Jim Packer, president of worldwide television distribution, in a statement.  “It represents a great opportunity to continue monetizing our robust theatrical slate while supporting the continued strong growth of Starz.”

Lionsgate Play SVOD Service Launches First Original Indian Production

The Lionsgate-owned streaming platform Starz, which last year launched a low-cost, branded Lionsgate Play mobile app in India, is partnering with Lionsgate Television on its first Indian original series, a remake of the Golden Globe-nominated series “Casual.”

The series will kick off Lionsgate Play’s first original slate of drama, comedy, crime and action series for the Indian and South Asian markets, building on the success of such award-winning series as “Normal People” (nominated for two Golden Globes), “The Goes Wrong Show” and “Love Life.”

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Lionsgate Play is part of a Hollywood trend targeting India’s mobile device-centric consumer with streaming entertainment. The $1.37 monthly/$9.65 annual app is available to download across a broad array of platforms and devices, including the Google Play store, the Apple app store and Amazon Fire TV Stick. The market is projected to reach 200 million SVOD subscribers by 2025, according to Futuresource Consulting.

“Lionsgate Play continues to gain momentum in India, proving to be a strong driver of Starz’s international growth,” Jeffrey Hirsch, Starz CEO said in a statement.

The series will be directed by Kunal Kohli, the Bollywood film director known for films such as Hum Tum and Fanaa, and will star Lara Dutta and Prateik Babbar. The former Miss Universe 2000, Dutta has starred in the films Housefull and Don 2, among others. Babbar starred in Jaane Tu, Mumbai Diaries and numerous other films and premium series.

Since Starz began its international rollout in 2018, the StarzPlay global subscription platform is now available in 56 countries, including its StarzPlay Arabia joint venture.

“Our ability to kick off the Lionsgate Play original slate with the remake of a great intellectual property, shows what we can achieve through the continued collaboration of our Starz, Lionsgate Television and Lionsgate India businesses,” said Lionsgate Television Group Chairman Kevin Beggs.

Lionsgate Home Entertainment Revenue Up Through Nine Months of Fiscal Year

Lionsgate home entertainment continues to see a digital lifeline as the pandemic undermines major new movie releases due to theatrical closures and limited seating.

The studio Feb. 4 reported third-quarter (ended Dec. 31, 2020) motion picture revenue of $250 million, down almost 48% from revenue of $474 million during the previous-year period. Segment operating income, which includes home entertainment, inched up 2% to $50 million from $49 million last year — despite higher theatrical and ancillary revenue in the prior-year quarter.

Like other studios/distributors, Lionsgate attributed the motion picture decline to the pandemic that has seen 65% of major market theatrical screens shuttered and major releases backlogged, curtailing packaged-media and digital releases.

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“Our success in generating strong returns from early PVOD, multiplatform, and hybrid models for the films FataleAntebellumRunI Can Only Imagine and The Secret speaks to our ability to monetize current films, while at the same time working with our theatrical exhibition partners to plan for the future,” CEO Jon Feltheimer said on the fiscal call.

The studio said five feature films have returned to production, three new film productions have started, and in the coming months Lionsgate will begin shooting the Wonder sequel White Bird from director Marc Forster; Shotgun Wedding, starring Jennifer Lopez and Josh Duhamel; Are You There, God? It’s Me, Margaret from producer James L. Brooks; Borderlands, teaming Kevin Hart and Cate Blanchett; and John Wick 4, starring Keanu Reeves for 2022 release.

Total home entertainment movie revenue in the quarter fell 16.5% to $159.5 million, from $190.9 million during the previous-year period. DVD/Blu-ray Disc sales tallied $36.2 million, down almost 52% from $75.4 million in the previous-year period. Digital revenue increased 6.5% to $123.1 million from $115.5 million last year.

Through nine months of the fiscal year, home entertainment movie revenue is down 6.4% to $476.8 million from $509.1 million last year.

Top-selling packaged-media releases in 2020 included Midway and Knives Out.

Television production in Q3 saw operating income swing to black with $30 million on revenue of $228 million. That compared with an operating loss of $6 million and revenue of $189 million the previous year.

Television home entertainment content sales skyrocketed to $61.1 million, from $10.6 million the year before. Disc sales topped $3.1 million, up from $600,000. Digital revenue reached $58 million, up exponentially from $10 million in the previous-year period. Through nine months, home entertainment sales of TV content is up 150% to $124.7 million from $49.8 million a year earlier.

In spite of the challenges, Lionsgate is currently shooting 19 scripted television series and, another 20 unscripted shows around the world.

Through nine months of the fiscal year, total home entertainment revenue topped $601.5 million, up about 2% from revenue of $589 million during the previous-year period.

Meanwhile, Lionsgate’s move into over-the-top video distribution continues to grow. The Santa Monica, Calif.-based studio saw global subscribers, including StarzPlay Arabia, a non-consolidated equity method investee, increased to 28 million, with global OTT subscribers increasing 900,000 to 14.6 million, 52% of the total. StarzPlay International OTT subscribers grew 26% in the quarter and domestic OTT subscribers posted gains of 300,000 subs.

Starz SVOD subs in the U.S. increased to 9.5 million, up 31% from 5.6 million during the previous-year period. International subs increased to 2.4 million from 700,000. Spanish-language based SVOD Pantaya ended the period with 900,000 subs, up 50% from 600,000 subs a year ago.

“From the Starz acquisition four years ago, through the international rollout that began in 2018, we’ve been converting and scaling Starz into a modern, data-driven global subscription leader that has become the first ‘traditional’ service to have more over-the-top than linear subscribers, a critical digital inflection point,” Feltheimer said. ” By the end of next quarter, we expect streaming revenue to surpass traditional for the first time as well.”

 

CES: Streaming Execs Discuss Race to Please, Attract Customers

Executives from streaming services gathered at the virtual CES Jan. 12 to discuss how they aim to please consumers in an increasingly competitive marketplace.

“We are all in this battle to make sure our customers can find our content as easy as possible,” said Stefanie Meyers, SVP of distribution at Starz, who manages its digital business.

Sarah Lyons, SVP of product experience at WarnerMedia, said the company’s new HBO Max service uses a blend of curation and data to target programming to consumers.

“About two-thirds of the time consumers know what they are looking for,” she said. “In those instances, get out of their way. Make it as easy as possible.”

As far as content, Lyons said, “you see tremendous engagement when you offer up lots and lots of content.” But that content has to be a mix of originals and catalog, she said.

Meyers agreed, noting that theatrical blockbusters with huge marketing campaigns are a draw, but “if you have a deep library, that can help with retention as well.”

Consumers are in different mindsets when they approach a service, Lyons said. Sometimes they are ready to sit down for a two-hour movie, and sometimes they just want to watch for a quick 30 minutes. She noted a trend of families coming together to watch a story, either virtually or in their homes, as families did in the past gathering around the TV.

“What’s old is new,” she said.

Indeed, streaming is the new TV, noted Andrew McCollum, CEO of virtual MVPD Philo.

“20 years from now people aren’t going to consider streaming TV streaming; they’re just going to consider it TV,” he said.

Thus, the competition is heating up in the virtual MVPD marketplace that replicates traditional TV, with consumers confronted with streamers, such as YouTube TV, that are having to raise prices to cover the cost of content, especially sports and news.

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“A lot of the services came to market with price points that were not sustainable,” he said, citing YouTube TV’s price jump from $25 to $65.

Philo took a different tack, eschewing such costly content that consumers may not need or want.

“It was never our intention to be the lowest cost service, but it was our intention to be the best value service,” he said.

Consumers can now get bundles of streaming services “for less than they were paying for cable,” he said.

Pluto TV, now owned by Viacom, relishes its market leading position in the ad-supported VOD or free streaming marketplace, as well as the content available from its parent, said Pluto TV SVP of programming Scott Reich. Pluto fills a niche in the Viacom streaming strategy, he said.

“It’s about creating a complementary ecosystem,” he said. “Pluto is the priority on the free service side of things. Paramount+ and Showtime are obviously the priority on the paid side.”

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Content from Viacom is filling Pluto’s AVOD pipeline, delighting customers with classic shows.

“This year we added a lot of CBS content,” Reich said, allowing Pluto consumers to revisit “Three’s Company,” “Love Boat” and “Happy Days,” among other classics.

“What’s old is new again,” he said.

 Being a free service is an advantage in the crowded streaming market, he noted, “You just fire it up, and it works.”

Lionsgate’s Starz Launches on Sports-Themed FuboTV

Lionsgate-owned Starz Dec. 18 announced the launch of premium channels and SVOD library on sports-themed online television service fuboTV. Subscribers to the platform who also subscribe to Starz can now watch exclusive original series, including “Power Book II: Ghost,” “P-Valley,” “Hightown,” and “Outlander” as well as hundreds of movies and first-run films.

“We are thrilled to expand our OTT presence with our fuboTV partnership, bringing original series and a huge library of films to [the online TV channel’s] growing base of viewers in time for the holidays,” Alison Hoffman, president of domestic networks for Starz, said in a statement. “With our launch on fuboTV, Starz will be available on all major streaming services in the U.S.”

The platform offers access to more than 7,500 VOD selections including the upcoming third season of “American Gods,” premiering in January 2021; to Hollywood movies such as Once Upon a Time in Hollywood and Bad Boys for Life.

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“Starz offers something for everyone in the family to stream,” said Ben Grad, head of content strategy and acquisition for fuboTV.

Starz is available as an add-on to fuboTV’s base package, fubo Standard, for $8.99 per month. fubo Standard offers a broad mix of more than 100 channels, including sports, news and entertainment channels than in any other live streaming platform’s base package.

Lionsgate Play SVOD Service Bows in India

Starz has launched the direct-to-consumer OTT app Lionsgate Play in India, making premium Hollywood content available in multiple Indian languages, the company announced.

The service is priced at INR 699 for a year or INR 99 per month. In India, the app will be available to download across platforms and devices including the Google Play store, Apple app store and Amazon firestick.

New content available at launch includes the Anna Kendrick starrer “Love Life,” a fresh take on a romantic comedy anthology series; “No Man’s Land,” a Syrian civil war series; and “The Goes Wrong Show,” a comedy series with each episode having a different theme, including a period romance, spy thriller, a Deep South melodrama and a Christmas fable.

Movies offerings include the Jennifer Lopez starrer Hustlers, Gerald Butler’s action thriller Angel Has Fallen, the fantasy thriller Hellboy, and the action comedy The Gentlemen, starring Matthew McConaughey, Colin Farrell and Hugh Grant.

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Starz first launched internationally with its Starzplay international premium streaming platform in 2018. This month it will expand its global footprint into 55 countries throughout Europe, Latin America, Canada, Japan and India.

“India has always been a key market for us,” Jeffrey A. Hirsch, president and CEO of Starz, said in a statement. “The large and diverse population, increased data usage in urban and rural markets, and adoption of OTT across all demographics created an exciting opportunity for us to launch Lionsgate Play. We’re confident that our unique, exclusive and exceptionally curated content will generate a great response from Indian audiences.”

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“We will also be launching Indian originals in the coming months, featuring untold edgy urban stories from some of the best creative minds in the Indian film industry,” Rohit Jain, managing director of Lionsgate South Asia, said in a statement. “And we will continue our Lionsgate Play journey by adding to our deep roster of premium content through partnerships with exciting millennial stars like Kriti Sanon, Tiger Shroff and Sanjana Sanghi increasing the breadth and scope of entertainment for our subscribers.”