US media firm Lionsgate is pulling its streaming service Lionsgate+ (fka Starzplay International) out of numerous European countries including France, Spain and the Nordics, prompting questions around the company’s local originals strategy in the region.
The US mini-major, which reported Q2 revenues of $875m and an operating loss of $1.75bn, said the Gaslit streamer would cease operations in Germany, Italy, Benelux and Japan – as well as aforementioned France, Spain and the Nordics – by the end of Lionsgate’s financial year in March 2023.
It is something of an abrupt change of strategy for the streamer, which has expanded its originals output under president of international, Superna Kalle, over recent years.
The streamer ordered its first-ever German language original in March, with an adaptation of Frank Schmolke’s graphic novel Night In Paradise, while Spanish shows were also being sought after as recently as this summer.
European originals to date have included Mediapro Studios’ drama Express and Bambú Producciones’ Nacho, as well as French-language drama All Those Things We Never Said. The company also partnered last year with French broadcaster TF1 on anthology series A French Case.
Lionsgate said that the decision was in response to the challenging economic and competitive environment it faces, with the move contributing to a $218.9m restructuring charge in the quarter, primarily driven by content impairment write-downs in the affected territories.
At this early stage, there is no indication of how the decision will affect the company’s recent investments in local scripted content.
The company may still see a viable business in creating local content for other platforms, but the loss of its streaming capability could mean there is less incentive to create local market originals in territories such as France and Spain. The main international focus going forward will be on the UK, Latin America and Canada (as well as the US).
Lionsgate CEO Jon Feltheimer admitted that “economic and industry headwinds” are having “the greatest impact at Starz, where we are exiting seven territories.”
He added that the move would “allow us to streamline Starz’s international business and return it to profitability more quickly while continuing to build on the opportunities created by a strong Starz original series slate and focused content strategy domestically.”
In terms of current subscriber numbers, Lionsgate cited a global figure of 37.8 million including Starzplay Arabia, which is now majority owned by the owner of Middle East pay-TV operator E-Vision and Abu Dhabi-based investment group ADQ.
Global streaming subscribers increased 52% year-over-year to 27.3 million. Lionsgate+ subscribers grew 97% year-over-year to 14.8 million (including Lionsgate Play in India & South Asia). By streamlining the business, the company says its Starz division should reach breakeven by end of 2024.
Film and TV studio Lionsgate is still keen to spin off its pay TV and streaming division Starz into a separate stock – a move that Feltheimer believes will help the market valuations of both.
The CEO added: “We reported another strong library performance and continued growth in Lionsgate Television series deliveries as our studio businesses continued to perform in line with expectations.”
This article was amended after publication to clarify Lionsgate+’s Spanish originals to date.