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This is the right move for Starz. They should focus on moving onto the iPad and the app/channel stores for Apple TV and the next-gen Google TV. Re-upping woul

by zach 15y ago

This is the right move for Starz. They should focus on moving onto the iPad and the app/channel stores for Apple TV and the next-gen Google TV. Re-upping would only antagonize their existing content partners who they also have to renegotiate contracts with. Plus it is probably killing their subscriptions on traditional outlets ("Starz? Oh, no thanks, that's the one I get on Netflix"). At least this way they can turn off the spigot and entice people to subscribe before Netflix is primarily cord-cutters anyway. As for the way forward, licensing to Netflix is not exactly a forward-looking move -- Starz just a licensing middleman in this arrangement and they know it. They need to control a branded and coherent channel, not be a movie broker. Starz was valuable because of their mainstream movie content. Despite comments about bittorrent, the major value of Starz on Netflix is about 8-year-old girls being able to watch Tangled on an Xbox 360 (again and again...). It has been huge for rounding out Netflix's pitch as an alternative to rental. But to hear Reed talk about it, he probably was negotiating with the expectation that they'd be parting ways (how could they fix the Sony thing?) and so Netflix may not have been offering as much as last time anyway. I don't think the negotiations failing caught either side flat-footed. I think these companies can focus better on their revenue when they're separated. Netflix will have to overpay to get their first big chunk of studio newish-releases, but that's okay. They'll have some different stuff and get creative and I bet we'll like the result. Starz can figure out how to sell themselves to consumers without chopping themselves up. How? Well, every current Apple TV has 8GB of flash memory and Apple has put an App Store on every other platform they own, so you can see where that's going. And Google has gone double-or-nothing on Google TV for that reason. It sure seems like the Apple TV is the cable box of the future. Is Starz well-positioned to become a subscription service on the Apple TV? Sure. But maybe not if people can go next door to the Netflix app and get Starz movies there too. Seems like the right thing is happening here. I like where this is going.

MatthewPhillips 15y ago
Good post. I disagree about Apple TV. I think they don't want to have an app store. I think they're fine with adding sports channels, but for movies they want you to buy them through iTunes. They'd love a deal with Starz, through iTunes. I don't think they want competing middlemen on their platform though.
- zach 15y ago
  I think they're fine with sharing their platform with as many other services as want to be on there -- and that play by their rules. I think there are two clues to Apple's approach: 1. They're clearly evolving their offering towards purchasing -- notably, they just killed TV show rentals. Why stop offering rentals of TV shows, as unpopular as they may be? This was a major selling point of the ATV last year. It seems like they're laying the foundation for their fall announcement, but they had to do this a little early because the fall season starts soon. I presume that the announcement will be that they're leaving everything but purchases and movie rentals to the world of ATV apps. Movie rental I think they are still trying to evolve against the studio's feet-dragging. But TV shows are essential to an app store, so the new deal will be: You want to watch a TV show? Buy it or get the app. No confusing in-between option. Apple hates in-between options. 2. Their subscription policy. I think they definitely wanted to pick something that worked for the Apple TV as well. The brouhaha over those rules has subsided for now. But it's a lot harder to tell people to go buy or subscribe to something over the web when they're just sitting in front of an Apple TV. That's way more friction. You might as well tell them to call an 800 number. I think that's something that makes an Apple TV app store viable -- you almost have to have that rule, whereas it seemed kind of excessive on traditional iOS devices. And yes, they want you to buy movies and music only from Apple, but on iOS they have no problem with people using Pandora or Netflix or HBO apps which they get no money for. Because they're services, just like Netflix and the sports channels you mention. But on AppleTV, there will probably be more takers for the 30% split and Apple may go with a subscription-only model (i.e. no one-time-purchase apps at all). This is presuming they only allow video-based apps (wot, no Angry Birds?!?) that you could just call "channels". That is, very similar to the existing ATV apps. In fact, I think a secondary reason that Apple even created the new Netflix app, new YouTube app and sports apps is to work out and test the AppleTV's API and design. I presume they'll still be around in a new-look ATV in the same way that the YouTube app is still on every iOS device -- Apple doesn't like to lose control. They're just going to be the founding members of a club of thousands.
  - MatthewPhillips 15y ago
    We're not that far off; I think that is something Apple would do. But that's Apple going directly to content producers and making deals with them. That's not something Amazon, Hulu, Veoh, or Crackle could ever be part of (Netflix probably would get grandfathered in). Those are other middle men. Apple wants to be the middle man. It's a really tough sell though. Right now Starz or ABC or whoever can create a subscription channel on Roku, X-Box, Playstation, and I highly doubt they would have to pay anywhere near 30% (My guess is that those platforms are happy to have the content, and allow the apps for free).
mbreese 15y ago
I think that Starz also sees how well HBO is doing with HBO Go and is thinking that they could just go out on their own.
- technoslut 15y ago
  Unlike HBO, Starz does not really make any content worth watching. They really are just a middleman between the content owners and distributors. They don't carry the kind of weight HBO does.

by zach 15y ago

MatthewPhillips 15y ago

Good post. I disagree about Apple TV. I think they don't want to have an app store. I think they're fine with adding sports channels, but for movies they want you to buy them through iTunes. They'd love a deal with Starz, through iTunes. I don't think they want competing middlemen on their platform though.

zach 15y ago
I think they're fine with sharing their platform with as many other services as want to be on there -- and that play by their rules. I think there are two clues to Apple's approach: 1. They're clearly evolving their offering towards purchasing -- notably, they just killed TV show rentals. Why stop offering rentals of TV shows, as unpopular as they may be? This was a major selling point of the ATV last year. It seems like they're laying the foundation for their fall announcement, but they had to do this a little early because the fall season starts soon. I presume that the announcement will be that they're leaving everything but purchases and movie rentals to the world of ATV apps. Movie rental I think they are still trying to evolve against the studio's feet-dragging. But TV shows are essential to an app store, so the new deal will be: You want to watch a TV show? Buy it or get the app. No confusing in-between option. Apple hates in-between options. 2. Their subscription policy. I think they definitely wanted to pick something that worked for the Apple TV as well. The brouhaha over those rules has subsided for now. But it's a lot harder to tell people to go buy or subscribe to something over the web when they're just sitting in front of an Apple TV. That's way more friction. You might as well tell them to call an 800 number. I think that's something that makes an Apple TV app store viable -- you almost have to have that rule, whereas it seemed kind of excessive on traditional iOS devices. And yes, they want you to buy movies and music only from Apple, but on iOS they have no problem with people using Pandora or Netflix or HBO apps which they get no money for. Because they're services, just like Netflix and the sports channels you mention. But on AppleTV, there will probably be more takers for the 30% split and Apple may go with a subscription-only model (i.e. no one-time-purchase apps at all). This is presuming they only allow video-based apps (wot, no Angry Birds?!?) that you could just call "channels". That is, very similar to the existing ATV apps. In fact, I think a secondary reason that Apple even created the new Netflix app, new YouTube app and sports apps is to work out and test the AppleTV's API and design. I presume they'll still be around in a new-look ATV in the same way that the YouTube app is still on every iOS device -- Apple doesn't like to lose control. They're just going to be the founding members of a club of thousands.
- MatthewPhillips 15y ago
  We're not that far off; I think that is something Apple would do. But that's Apple going directly to content producers and making deals with them. That's not something Amazon, Hulu, Veoh, or Crackle could ever be part of (Netflix probably would get grandfathered in). Those are other middle men. Apple wants to be the middle man. It's a really tough sell though. Right now Starz or ABC or whoever can create a subscription channel on Roku, X-Box, Playstation, and I highly doubt they would have to pay anywhere near 30% (My guess is that those platforms are happy to have the content, and allow the apps for free).

mbreese 15y ago

I think that Starz also sees how well HBO is doing with HBO Go and is thinking that they could just go out on their own.

technoslut 15y ago
Unlike HBO, Starz does not really make any content worth watching. They really are just a middleman between the content owners and distributors. They don't carry the kind of weight HBO does.