Starz Encore Group LLC has bolstered its subscription video-on-demand offerings by reaching a 10-year agreement to distribute more than 1,000 of Metro-Goldwyn-Mayer Inc.'s library titles.
The agreement, disclosed last Tuesday, gives Starz Encore pay TV, SVOD and Internet video-streaming rights to 1,121 of the studio's titles, including the Rocky, James Bond, Pink Panther
and Woody Allen movie franchises, said Starz Encore chairman and CEO John Sie.
Showtime Networks Inc. holds pay TV rights to MGM's current and future theatrical releases through 2008, via an output deal signed last year.
Other titles in the library deal, the terms of which were not disclosed, include: Rain Man, Leaving Las Vegas, The Birdcage, Dances with Wolves, Silence of the Lambs, The Bounty, The Good, the Bad and the Ugly, Platoon, Thelma and Louise, The Apartment, West Side Story, Midnight Cowboy
and Some Like It Hot.
In addition to MGM, Starz Encore also holds SVOD movie rights from The Walt Disney Co. and The Samuel Goldwyn Co. The company's output deal with Sony begins in 2005.
"We have always coveted MGM's film library, which has the largest contemporary film collection in Hollywood," Sie said. "The MGM library titles, along with our new titles, will provide a very good mix of content for SVOD."
The deal will help Starz Encore to push its SVOD service, which was recently launched on Adelphia Communications' Cleveland system. Sie believes operators can add as much as $40 billion in market-capitalization value with the appeal of cable-on-demand offerings, which include both pay TV and basic-cable SVOD services.
By aggressively rolling out new revenue streams created through premium, basic and narrow-niche SVOD services, cable operators can add as much as $5 in cash flow per basic subscriber per month, Sie said last week at Kagan Associates' VOD Summit in New York. Over a 12-month period and a base of 60 million subscribers — a level the industry must surpass to remain competitive — SVOD services would add more than $43 billion to cable's valuation, Sie estimated.
He also said SVOD could help stir growth for digital cable, which was down 36 percent during the second quarter of 2001 compared with fourth quarter 2000.
"It's cable's game to lose," Sie said. "It's up to cable to capitalize on the opportunity in front of it before competing services, such as [personal video recorders], extract out much of the upside."
Several panelists at the seminar also maintained that SVOD could combine with other VOD to generate significant incremental revenue for operators. Many agreed that SVOD and VOD could net operators $10 to $15 per subscriber in incremental revenue, generated mostly from movie-based VOD and premium-network SVOD offerings.
Investment banking company SoundView Technology Group principal Jordan Rohan warned the industry not to expect too much too fast.
"Consumers' habits are hard to change and it will take time to evolve," Rohan said. "But the promise is there."
