Gates seeing Starz

Windows platform key to beefier pay service

Bill Gates and John Malone are steamed that people are not watching enough movies on their computers or on portable media players, and they’re planning to do something about it.

To wit: Malone’s Starz has revamped its online subscription-movie service, linking with Microsoft’s Windows platform and beefing up the theatrical menu from an average of 300 titles to 1,000.

To be called Vongo, new service will draw on all of the titles from Walt Disney/Touchstone/Miramax and Columbia/Revolution/Screen Gems in the pay TV window, ranging from “The Incredibles” and “The Aviator” to “Hitch” and “Charlie’s Angels: Full Throttle.”

Bob Greene, senior VP of advanced services for the Starz Entertainment Group, said Vongo’s monthly fee will drop from $12.95 to $9.99, and subscribers will be able to transfer downloaded movies from their computers to specially designated portable media players.

The bulk of the 1,000 movies will be library titles from the six big movie companies and indie distributors with movie inventories.

“With only 300 titles, the original Starz service clearly wasn’t deep enough to be a smashing commercial success,” said Laura Behrens, principal media-industry analyst with Gartner Research.

But for the time being, Starz Ticket on Real Movies, the 300-title, $12.99-a-month partnership between Malone and RealNetworks, will continue to operate parallel with Vongo.

To be competitive with Movielink and CinemaNow, Vongo also will offer the full range of pay-per-view titles from all of the major studios. Not covered by the $9.99 monthly subscription, these movies will cost $3.99 each.

Bruce Leichtman, president of his own media research company, said Vongo is ahead of the curve in that Starz is the only TV network offering such a subscription-based online movie service, clinching deals with Disney and Columbia for Internet rights to their movies precisely to engineer experiments like Vongo.

“Movies are compelling content,” said Leichtman, adding the Starz strategy could push many more people to buy hand-held media players to watch movies, particularly on planes, trains and exercise machines, or sequestered in remote locations.

(Movie companies have built a code into each movie to make it compatible with a Microsoft player but prevent its transfer to an unauthorized hand-held device.)

Josh Bernoff, VP of media/marketing devices for Forrester Research, said Starz will be able to draw on the marketing clout of Microsoft, which, compared with RealNetworks, has limitless resources.

Microsoft will ballyhoo its Starz deal at the Consumer Electronics Show in Las Vegas later this week, touting the convenience that comes with portability of downloaded movies.

Cable operators are ambivalent about Starz’s online thrust because if Vongo becomes too enticing, it could lead people to cancel their subscriptions to the Starz! TV network, a downer for the ops because they’d lose the fees they collect for every subscriber.

In those cases, Starz would urge the operators to make Vongo part of their pitch to get subs to buy high-speed access to the Internet, offering a discount to people who buy the service both on cable and online. In effect, cable ops would protect their Starz! TV subscriptions and pick up a financial stake in Vongo.

Starz’s Greene said of the people who use Starz Ticket on Real Movies, only 30% also subscribe to the Starz! network.

The name Vongo has no special significance, Greene said, adding that most industryites who’ve sat through the pitch think it stands for video-on-demand to go.

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