Starz shutting down Vongo, concentrating on wholesale

By Jeff Smith, Rocky Mountain News (Contact)

Published August 12, 2008 at 7:35 p.m.

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Liberty Media's Starz Entertainment will shut down its Vongo consumer video-downloading service on Sept. 30, and focus solely on a wholesale version called Starz Play.

The move comes less than three months after Starz announced its first wholesale deal with Verizon Communications.

"Our (intent) is to be in the wholesale business and always has been," said Starz spokesman Tom Southwick. "The reason we did Vongo is that we wanted to get into the business and figure out how it worked."

Southwick said other wholesale deals with telcos, cable companies or satellite TV companies are in the works or in discussion. He wouldn't comment whether that included a potential wholesale deal with DirecTV, which now is controlled by John Malone's Liberty Media.

Douglas County-based Starz has never disclosed how many subscribers Vongo had or whether it was profitable. It was launched in early 2006, one of the early entrants into the business.

The movie-downloading business, which enables consumers to download and watch movies and videos on their computers, has become crowded and competitive.

Vongo was sold for $9.99 a month. Subscribers had access to live Starz programming and a library of 2,500 movies and videos.

Bruce Leichtman, owner of Leichtman Research Group in New Hampshire, said that selling the online video service directly to consumers is a more challenging model than working through wholesalers with a consumer base like Verizon.

Verizon has been offering the Starz Play online video service at $5.99 a month to its more than 8 million broadband customers.

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