Lionsgate has high hopes for Starz Play, the subscription streaming video service complimenting the branded pay-TV platform the studio acquired for $4.4 billion in 2016.
Instead of possibly selling the platform — reportedly to CBS — Lionsgate is eyeing Starz Play in the same way Disney projects its future around pending SVOD service Disney+.
The Santa Monica, Calif.-based studio/distributor will expand Starz Play International from the current 42 countries to 51 countries by July 1, CEO Jon Feltheimer said on the May 23 fiscal call.
“We believe the international market is a $45 billion opportunity for us, resulting between 24 million and 25 million new Starz International subscribers by 2025,” Feltheimer said, “making Starz Play one of the three leading pureplay subscription video-on-demand services in the world.”
Launched in 2016, the streaming service has about 4 million domestic subscribers, excluding 3 million international (including 1 million for Starz Play Arabia), which Lionsgate co-owns.
Combined with pay-TV, Starz added 1.2 million total subs to end fiscal 2019 with 24.7 million subs – largely through Amazon Channels, Roku, Apple TV, Hulu, Virgin Media in the U.K., Orange and Vodafone in Spain, and Bell Media in Canada.
Lionsgate plans to stream its original theatrical slate during the “pay-1 window,” in addition the entire movie catalog on Starz Play. The service will also include original TV shows such as “Power,” “Spanish Princess,” ‘American Gods,” and “Vita,” among others.
Feltheimer said the streaming platform is ideal for third-party content holders, including local programming in foreign countries.
“We view this as an investment into our future,” he said. “We’re off to a great start.”
Whether Wall Street concurs will take time. CFO Jimmy Barge said there exists a “substantial valuation disconnect” between company’s “enthusiasm” for the international streaming business and the current “investor perception.”
Indeed, the CFO contends Lionsgate has more than $500 million of “negative value” weighing on the company’s market value due to streaming.
To offset the disconnect with investors, Barge said Lionsgate would begin providing more clarity on financial statements and subscriber growth data regarding Starz and Starz Play within the company’s media networks business segment.
Within five years, Lionsgate expects Starz Play to generate from 15 million to 25 million subscribers within the 51 foreign countries. He said international losses from Starz Play International would peak around $125 million to $150 million in fiscal 2020.
Starz Play is projected to achieve fiscal profitability by fiscal 2023.