Lionsgate continued to see strength from its Starzplay international subscription video on demand (SVOD) and other over-the-top (OTT) streaming services in the third quarter (ended Dec. 31), according to company executives.
“We continued to make significant progress in the quarter, building out our streaming business, with 8.6 million global over-the-top paid subscribers across” Starz, Starzplay Arabia and the Pantaya Spanish-language streaming service “accounting for 30 percent of our 28.5 million total global subscribers,” Lionsgate CEO Jon Feltheimer said Feb. 6 on an earnings call.
Globally, the company added 2.1 million overall subscribers from a year ago, growth of 8%, boosting total subscribers to 28.5 million at the end of the quarter, CFO James Barge told analysts. Domestically, total subscribers were 24.1 million, down 1.2 million from a year ago, he said. However, the decline Starz saw in domestic multichannel video programming distributor (MVPD) subscribers was “more than offset by domestic OTT and international growth,” he noted.
At Starz domestically in the U.S., “we continued our transition in the quarter to an on-demand environment that will ultimately result in higher” average revenue per user (ARPU) “linear subscribers and higher-value over-the-top subscribers,” Feltheimer told analysts.
Also significant was that the company “reached a multifaceted long-term agreement with Comcast that provides a revenue glide path into a new distribution arrangement,” Feltheimer said. The deal “allows us to build an a la carte revenue sharing business together” and includes a content licensing deal with Peacock, Comcast’s new streaming service, he said.
Feltheimer took the opportunity to remind analysts that Starz has “successfully sold a la carte on the platforms of cable and satellite operators and telcos, as well as streaming platforms, for years.” The company will, in fact, “end the fiscal year with a projected 61 percent of Starz revenues already coming from our a la carte business,” he noted.
Internationally, the strategy for the Starzplay streaming service, meanwhile, “continues to drive strong results [and] we’re executing fully on this strategy, having launched on 49 platforms in 30 countries and we remain on track to hit our financial and subscriber targets,” he said.
The company’s Starzplay content slate, including “The Spanish Princess,” “Dublin Murders” and “Power,” along with acquisitions including “Killing Eve,” is “resonating with global audiences and fueling our growth in key markets” including the U.K., Spain, Germany and Mexico, he told analysts. The company has also started to “complement this original programming with local language co-productions and a lineup up of hit movies in key territories,” he said.
Starz also announced Feb. 6 that it “will be splitting the first pay window for our theatrical releases in the U.K. with Amazon, our critical distribution partner in that territory,” he pointed out.
In India, where the firm’s streaming service is called Lionsgate Play, it is supplying its own first-run movies exclusively to the platform and it’s also “already entered strategic partnerships with market leaders Vodafone and Airtel,” he said, adding: “As we continue to expand internationally, our experience with the Starzplay Arabia Venture serves as a perfect blueprint for our new territories.”
In 2015, the company “saw an opportunity” in the Middle East North Africa (MENA) region with “consumer behavior just beginning to pivot to digital consumption and growing demand for a subscription video on demand service that could partner with the regions’ cable, telco and satellite operators,” he recalled.
Fast forward five years and Starzplay Arabia has “achieved 1.7 million subscribers and is one of the top two SVOD services in the 19 MENA markets,” he told analysts.
“In an environment that is more disruptive than ever, our own identity and focus are clear: to… take advantage of our early mover position as an expertly curated, well-differentiated premium service that sits on top of global and local platforms alike as we continue to convert our strengths into reaching our target of 15 [million] to 25 million paid international subscribers over the next five years,” he went on to say.
In the company’s Motion Picture Group, Lionsgate scored in Q3 with the films “Bombshell,” “Knives Out” (which has started a new franchise movie series for the company) and “Midway,” he also said. “Knives Out” is on track to “soon break $300 million at the worldwide box office, has earned multiple award nominations and serves as further proof that franchises can emerge from any of our content verticals,” he said.
Total Lionsgate Q3 revenue grew to $998.5 million from $933.2 million a year ago.