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Starz to Issue Pre-Paid Cards as Alternative to Traditional Subscriptions

Starz is going to issue pre-paid subscription cards that allow consumers to pay for the premium service without using credit cards, CEO Chris Albrecht revealed Tuesday in a Q&A session at the Recode Media conference in Laguna Niguel, Calif.

While he stopped short of offering details on the new payment option, which are still being worked out according to a Starz rep, Albrecht said the pre-paid cards will be on the market sometime early this year. One variable still being debated is how long a period can be purchased considering a monthly rate could make for subscribers who wouldn’t stick around for long.

“One of the big obstacles in the subscription business is churn, whether TV or magazines,” he said.

Pre-paid cards, which other premium TV or streaming services from HBO to Netflix don’t typically offer in the U.S., is just one way Albrecht says he’s rethinking standard Starz operating procedures as it is just months into the direct-to-consumer business via its branded app. Starz has long been a pay-TV premium option, and more recently entered into streaming via platforms owned by tech giants including Apple and Amazon.

Pre-paid cards are also intended to be attractive to Starz’s target demographics, which include households under $50,000 per year. That’s different than the typical more upscale subscriber pay-TV typically attracts, according to Albrecht, who should know from his earlier stint running HBO during the 1990s.

The direct-to-consumer model helps Starz get more traction with lower-income households because it removes the barrier of the basic-cable tier that was previously a prerequisite for consumers interested in buying premium channel subscriptions.

Albrecht also differentiated himself from his premium rivals by getting caught up in the arms race to spend upwards of $100 million on an original series. “I don’t think that’s the best choice for us in order for us to grow our business,” he said.

In addition, Albrecht cited Starz acquisition by Lionsgate as improving the economics for TV production through its TV studio, which will enable him to see more options for programming, access better talent and more effectively monetize ancillary rights than Starz could do alone. However, he also explained that Starz won’t buy TV series strictly from Lionsgate.

Albrecht didn’t update the membership numbers for the Starz app, which he repeated has reached 1 million subscribers. HBO Now recently announced hitting the 2 million mark, while Variety exclusively revealed Monday that Showtime just reached 1.5 million.

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