Starz Steps up Global Monetization of Originals
A first-ever U.S. online-only SVOD deal with Amazon and new content licensing agreements with Netflix are the latest moves of the company led by CEO Chris Albrecht.
Starz on Wednesday unveiled a deal with Amazon, its first-ever U.S. subscription VOD content licensing deal with the company, for The White Queen.
The deal, exclusive versus other online-only subscription platforms, followed a deal that quietly made available Starz original series Spartacus and Magic City to Netflix subscribers in the U.S.
Starz licensed the complete Spartacus library to Netflix for the U.S., Canada, and other worldwide markets, starting Feb. 1, according to Starz executives. As in the case of the Amazon agreement, the deal is exclusive versus other online-only subscription platforms and allows the content to remain on the Starz On Demand and Starz Play services.
The company also licensed both seasons of Magic City to Netflix for the U.S., Canada, France, the Benelux countries and the Nordics. And in another deal with Netflix, Starz licensed The White Queen for France and the Nordics, according to Starz executives.
All the arrangements come as the premium TV company, led by CEO Chris Albrecht, continues to monetize its growing number of original series.
As Sterne Agee analyst Vasily Karasyov said late in 2014: "Original scripted programming is what drives value of a premium network."
"As we continue to increase the amount of content we have, we have more content to play with and can assess the best value for each piece of content," said Starz chief revenue officer Michael Thornton about the recent slew of digital deals. "We give it to our subscribers, then extract value from linear or SVOD platforms."
Asked about the recent deals, Mara Winokur, senior vp digital at Starz said: "We have more shows, we have bigger shows, more widely released shows. It's a natural evolution."
How does Starz choose the best partner for each show? "They have a sense for what they really want. We combine that with what is the best value of monetization and the best strategic value for us,” Winokur said. “We look at what is the best syndication, because in our mind, this is all syndication."
For example, in the case of Spartacus, Syfy was interested, so Starz went linear with the show on Syfy first, then agreed to make it available on Netflix, she explained. In the case of The White Queen, Winokur and Thornton said Amazon seemed the better fit due to its user base. They said women using Amazon Prime would be a key audience for the show.
With the number of digital video companies having expanded, "it becomes a little more complicated" to decide where to take content, Thornton acknowledged.
And while some things change from deal to deal, certain basics stay the same. For example, Winokur said "each deal is different," but Starz in all deals retains the right to make available originals on its Starz services.
Does Starz approach digital licensing deals differently in the U.S. and international territories? The company executives said since Starz has channels in the U.S., there are different strategic considerations than in the rest of the world, except for the similar Canadian market.
Is Starz looking for possible global rights deals with single online platforms on its originals? "We would not rule out global rights deals," Winokur said. "The problem is we don’t know which territories [partners like Netflix] will go into, so we would specify markets in deals."
Starz may also consider content package deals with digital players in the future to give them access for a big part of its originals portfolio. "We can’t rule anything out," Winokur said. "But right now we are looking at deals on a title-for-title basis."
Time Warner’s HBO last year, for example, struck a multi-year deal for its originals with Amazon Prime. But HBO has a deeper original content library to play with. "HBO had an entire library of content," Winokur said. "We are still developing and growing the new series we have. Once we have an even bigger library, maybe we'll do a packaged deal. But we won’t hold up deals."
Among the new Starz original shows in 2015 are the likes of Ash vs. Evil Dead and The Girlfriend Experience, an anthology series based on the Steven Soderbergh film, and they will only add to Starz’s monetization efforts.
Asked about interest in the Evil Dead show, Winokur said: "Outside of the U.S., we have already gotten inquiries."
Starz used to have a much-maligned Netflix deal that came to an end in early 2012. Critics said Netflix got Starz content, including Disney and Sony movies, on the cheap at the time. Since then, Netflix has had some Starz shows, but no major ones, making the recent Netflix deals for Starz originals particularly interesting.
"I personally wasn't at Starz when the Netflix deal ran its course," Thornton said. "I think we learned from our mistakes and are much more cognizant about how it affects our other customers and want to be sensitive to them. We are really looking at extracting the value for our customers and our producers." Now that Starz has more originals, the time seemed right for deals for select shows, he added.
Winokur said digital content deals not only bring in undisclosed revenue, but also help promote the Starz brand and channels. "Spartacus on Netflix enables people to see it’s a show from Starz,” she said. “So they may say 'I wonder what else Starz has.' This is additional marketing to a crowd that may not be aware of what we have."
While Starz doesn't comment on the price tags of licensing deals, Winokur and Thornton said value is mostly driven by the company's channels. Said Winokur: “When a show is successful on the channel, it helps the price.”