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Starz Pulls Plug on Vongo

8/15/2008 8:00 PM Eastern

Starz Entertainment will pull the plug on its struggling, stand-alone broadband subscription service Vongo next month, while continuing to operate under the Starz Play brand currently distributed by Verizon Communications.

The 32-month-old Vongo — which for $9.99 per month offers online users unlimited viewing of more than 1,000 movies, as well as a simulcast of the Starz service — will discontinue service at the end of September, according to Starz officials last week. It stopped taking new customers as of Aug. 1.

Starz president and chief operating officer Bill Myers would not reveal how many subscribers currently pay for the service, which launched in 2006 at the Consumer Electronics Show.

“We’re not uncomfortable with the sub count we generated from Vongo,” he said. “We got the sub count that we thought we needed to get to really learn from and understand what the customer wanted. Everything that we got out of our investment we’re redeploying in Starz Play.”

Indeed, Starz will offer the rebranded Starz Play service to operators to distribute on their Web-based platforms. Verizon is currently the only distributor that offers the Starz Play online movie service, which provides more than 1,000 movies — including Ratatouille, Spider-Man 3 and Pirates of the Caribbean: At World’s End — and 1,500 other video titles including original Starz content.

Verizon is also making the Starz Play service available to non-Verizon broadband customers for $5.99 a month.

To use the service, a subscriber downloads special software from Verizon to access the downloadable titles from up to three different devices, including Windows-based computers and personal video players.

Myers said the company is negotiating a “rate structure” that will include compensation for its Starz Play service, but would not reveal specifics. Operators, however will have the opportunity to offer the service as they best see fit for their subscribers and business.

“We always felt that the best place for our IP product was to be a wholesale product that was a brand extension and therefore and add on service to product already offered by our distributors,” Myers said. “That has been our goal and we’re working down that path now — we have a deal with Verizon and we’re negotiating with several of our other affiliates.”

In other Starz news, the company will team with Bresnan Communications to offer a series of outdoor movie events.

Dubbed “Bresnan Under the Starz,” the cable operator will air Open Season, the Sony Pictures Entertainment animated family movie, during free outdoor events in nine of its markets sprinkled throughout Wyoming, Montana and Colorado over the next six weeks.

Company officials said it plans to have live radio remotes and other local promotional activities in each market.

The tour was scheduled to kick off in Cheyenne, Wyo. on Friday, Aug. 15 at Lions Park Amphitheater and concludes Sept. 20 at Lasting Legacy Park in Gillette, Wyo.

September