10 months after Paramount, MGM and Lionsgate announced they were forming a pay TV channel, the project has yet to secure a cable or satellite TV distributor and is now looking for the web to be a bigger part of the operation.
The studios launched the $35 million project–dubbed Epix–after Showtime said it no longer wanted to pay the studios $350 million for their movies. Internet streaming was always supposed to be a part of the venture, but now it’s looking like an increasingly important component.
The LA Times says Time Warner Cable, Comcast and DirecTV all seem uneasy about adding an expensive new movie channel during a recession.
Derek Chang, DirecTV’s executive vice president for content strategies, told the paper the satellite company wasn’t ready to sign on.
“It’s still preliminary,” he said. “They are continuing to adjust their business strategy and we are continuing to have conversations with them.”
But the studios, meanwhile, need the steady revenue stream of cable fees, as the Times explains.
Studios depend on licensing fees from pay-TV contracts with HBO, Starz and Showtime to help offset the costs of filmmaking. The arrangements provide steady income, a tonic in a volatile business where millions of dollars are spent making and marketing a single movie — which might land with a thud in theatres. Even modest box-office performers generate millions in revenue from their runs on premium movie channels.
The desire to wring as much as possible from pay-TV contracts was the reason Epix was formed in the first place.
Indeed, the three studios want a hefty $1.50 monthly per-subscriber fee from distributors, which may be partly why many cable and satellite companies are balking.
Epix execs and the studios remain optimistic they’ll soon get the cable and satellite backing they need. Viacom CEO Philippe Dauman recently said the venture would launch a subscription-based Internet site in May and the TV channel in October.
Meanwhile, the project is still set to debut online and hopes to be able to start streaming new films nine months after they hit theatres, which is roughly three months faster than new movies show up on HBO and Starz. They’re also considering partnering with Netflix and exploring other nontraditional deals.
Epix’s CEO Mark Greenberg argues that the project is responding to the marketplace and making movies available the way people want to see them, which is largely online.
“We think that making the films available on broadband, on-demand television and through their mobile phones allows the viewer to see the content the way that they want to.”…
Greenberg said the plan to stream movies should lure cable, satellite and telephone companies because it could encourage customers to upgrade their Internet service to higher speeds that accommodate movie viewing…
However, making movies easily available on the Internet could backfire by alienating traditional cable companies that have long paid hefty fees for exclusivity.
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