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Starz Shops IPTV Service

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
4/10/2008
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Now that operators are starting to roll out new, faster modem tiers, including some using Docsis-based channel bonding techniques, programmers in the subscription/premium category are setting their sights on Internet-based services tailored for their cable and telco distributors.

Among that group, Starz Entertainment LLC has already created a subset of its direct-to-consumer Vongo service for just that purpose. Dubbed Starz Play, the service would give broadband customers access to about 2,500 movie and video selections and a live stream of the flagship Starz network. Starz Play does not offer the 200 pay-per-view titles delivered through Vongo, which was introduced at the 2006 Consumer Electronics Show.



Starz won't be the only premium programmer pitching such a product to affiliates. Time Warner Cable Inc. (NYSE: TWC) is already offering the HBO On Broadband service in Milwaukee and Green Bay.

Showtime Networks, meanwhile, has hinted that it might offer a broadband service later this year.

The Real deal
Fashioning a subset of Vongo for cable distrubutors was in the plans all along, according to Robert Greene, the executive vice president of advanced services for Starz.

"We've been pitching a wholesale product since day one," Greene says. In fact, Starz was pitching the concept in the pre-Vongo days, when it was hawking an online subscription movie service in partnership with RealNetworks Inc. (Nasdaq: RNWK) that launched in June 2004.

"But the implementation was a mess," Greene recalls of the service, known then as Starz Ticket on Real Movies [Ed. note: That name didn't help, either.].

"We are staying true to our original vision and original business model that Vongo was created upon... that it would go to multiple constituencies to drive this business," Greene says.

Vongo launched in January 2006 under a consumer retail model "because we could," he adds. "We didn't have to wait for anybody's permission or timetable. Although I wouldn't have said it at the time, it was really there to start a conversation."

That conversation got underway with Starz's big distributors, which weren't ready to offer broadband-based premium video services of their own.

"We've always believed that our business would come down to working with our big distributors rather than trying to go out and get onesies/twosies, in terms of customers," Greene says.

Starz has not disclosed the number of Vongo subscribers. As of Dec. 31, Starz had 16.3 million subscribers through its cable, telco, and satellite TV distributors.

New model
With Starz Play, it's the cable operator that owns the customer relationship -- as opposed to the Vongo model, where the programmer is the one selling to the customer. Moreover, Starz Play puts the operator in charge of billing, service provisioning, and the distribution and hosting of the content.

Starz Play is in play, finalizing contracts with several large operators that Greene won't name. Nor will he discuss what his company will charge its cable affiliates for access to the service.

"We will have launches this year to a large number of customers," he says, helpfully.

Greene hopes Starz Play will create new, incremental revenue for its affiliates, which could market the service to customers who already subscribe to Starz, or to people who don't take the premium video service but do use the operator's high-speed Internet service.

He also believes operators will have to add value if they expect customers to pay more for higher-speed tiers. Although it's just the first commercial launch, Comcast's Docsis 3.0-based 50-Mbit/s (downstream) tier is selling for the princely sum of $150 per month. (See Controlling Doc$is 3.0 .)

— Jeff Baumgartner, Site Editor, Cable Digital News

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