Lionsgate saw the streaming version of its premium movie network Starz add more than 700,000 subscribers during the first three months of 2023, fueled in part by an injection of hit television shows and a strategy to bundle Starz with third party streaming services on Amazon.
On Thursday, the company revealed Starz logged 12.3 million streaming subscribers in the U.S. as of March 31, up from 11.6 million reported during its previous quarter and an increase of 9.5% compared to the same time frame in 2022. Its streaming growth more than covered the loss of Starz subscribers on cable and satellite, which dipped down to 8 million, a loss of 300,000 customers. Overall, Starz reported 20.3 million subscribers across all domestic platforms.
Executives said Starz was helped in part by a decision to bundle the premium movie network with two other services on Amazon's Prime Video Channels platform. There, customers can save money by bundling Starz with MGM+, which is owned by Amazon, or AMC+. The bundle with MGM+ costs $12 a month, while the version with AMC+ costs $14 a month.
By itself, Starz costs $9 per month when streamers purchase a subscription direct from the company, a price that has remained unchanged since Lionsgate offered the movie network without a traditional cable package seven years ago. That streak ends next month when Lionsgate raises the price of Starz by $1.
On a conference call with investors this week, a Lionsgate executive justified the price increase by saying the company had injected more original content into the service, which made its library more valuable.
"We really looked at the business, and did a lot of analysis around the business. We haven't changed the rate since we launched into the digital side of the world seven years ago, and in that time, some of our peers have done one — and, some of them, two — rate increases," Jeffrey Hirsch, the CEO of Starz, said during the call. "We feel pretty good that, with increasing our slate from six to 11 originals, all of the great movies offered from Lionsgate and Universal, that at sub-$10, it's still a great value for the consumer."
Hirsch said the company expects to see "some short term subtraction," or decrease in subscribers, as a result of the price increase, but that the new rate would deliver long-term benefits for the business.
That part is critically important as Lionsgate looks to separate its studio business from streaming later this year, with executives hoping to complete the spin-off of Starz by September. On Thursday, it appeared both sides of the company would remain relatively healthy without the other, as executives touted strong revenue during the quarter that beat Wall Street forecasts.
Revenue jumped 17% to $1.09 billion, owed in large part to continued licensing agreements for Lionsgate films and television shows. Those agreements include a new deal to reboot two series, "Nurse Jackie" and "Weeds," which will land on Paramount+ with Showtime, as well as programs in development for Apple TV+, Comcast's Peacock, Disney's ABC and Prime Video.
Executives also announced on Thursday that Lionsgate has scored the exclusive worldwide distribution rights to three Quentin Tarantino films — both "Kill Bill" movies as well as "Jackie Brown" — and will be remastering the Kill Bill franchise in ultra-high definition for its 20th anniversary. Lionsgate previously had distribution deals for some of Tarantino's other films, including "Pulp Fiction."
"It was a real coup for us to get the three Quentin Tarantino movies," Jim Packer, the president of worldwide TV and digital distribution at Lionsgate, said on the call. "We have eight, which really gives our library a unique situation in Hollywood, and we’re going to take advantage of that."