Lionsgate offers a little insight into its answer to the ongoing issue of how to make streaming a profitable venture.
As the world continues to reckon with rocky economic conditions and the false streaming spike caused by the pandemic vanishes into the rear view mirror, lots of companies are finding themselves wondering how on earth to make a profit out of these hugely expensive streaming platforms that they’ve fully committed to.
One of the significant issues is the way these platforms integrate with other parts of a company’s business. Disney is a great example here, with Disney+ causing no end of problems for the company’s film division, not least the damage that Disney+ has inflicted upon its Pixar brand in the name of servicing its streaming service. It’s reached the point where the company’s CEO, Bob Iger, is now extending his time in the role for another two years to try and figure out how to make it all work.
Lionsgate has decided on a course of action in this area, and it involves completely splitting those two parts of its business. The company revealed a few more details about the split this week (thanks to Deadline) confirming that the companies (Lionsgate and Starz) will become entirely separate. Lionsgate acquired Starz back in 2016 for $4.4b.
Splitting the company into two is intended to compel each new operation into seeking independent profitability rather than trying to service one division at the cost of the other. Shareholders will receive stock in each company. We seem to be entering a new era in the ‘streaming wars’ now, following that initial gold rush, where companies are now taking steps to modify their approach and plot paths to sustainability and profit for their streaming operations. This is Lionsgate’s approach – time will tell whether it proves to be the right one.
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