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Vongo to Shut Down

Vongo, the online movie-download service launched by premium cable programmer Starz Entertainment in January 2006, is officially shutting down next month in favor of a new, rebranded service, Starz Play, which is currently being marketed by telco Verizon Communications.

Starz was quiet about the move, posting a notice on the Vongo Web site Aug. 1 that it would no longer accept new subscribers for Vongo and notifying existing subscribers that the service will officially shut down Sept. 30. The notice encouraged consumers to “enjoy the same great subscription movie-download service by signing up for Starz Play provided by Verizon.”

Starz Play is fundamentally the same service as Vongo except that it doesn’t offer the transactional pay-per-view option for watching new releases that Vongo did. It also requires existing Vongo subscribers to uninstall the Vongo video-player software from their computers, re-register with Verizon for Starz Play, and then reinstall new video-player software.

Verizon -- which began offering Starz Play as part of a broad agreement reached in late May that includes carriage of the Starz movie channels on the FiOS TV fiber-optic TV service -- is selling the service for $5.99 per month, some 40% less than the $9.99 Starz charged for Vongo, which it marketed directly to consumers.

Although Verizon is marketing Starz Play, the service is available to any Internet user with a connection of 700 kilobits per second or faster, not just Verizon broadband or TV customers. The deal with Verizon is not exclusive, and Starz spokesman Eric Becker said the programmer is in discussions with other Starz programming affiliates to market the download service.

Starz won’t reveal how many consumers subscribed to the Vongo service, which was launched with a big splash at the Consumer Electronics Show in Las Vegas in 2006 and that subsequently went through several upgrades to improve its video quality and user interface.

But according to Becker, Starz is not shuttering Vongo because it was a failure, but instead because the company’s long-term plan all along was to launch a Starz-branded online service that affiliates would market. He said companies like Verizon, with massive customer-care and billing operations, are much better suited to sell directly to consumers than Starz, which has primarily sold its licensed content on a wholesale basis to cable and satellite operators.

“Vongo absolutely fulfilled its mission for us, as we became experts in this space,” he added. “We knew that we were very early, but the end game for us was to help catalyze the market.”

Becker conceded that having to re-register for Starz Play and install a new player will be a minor hassle for existing Vongo subscribers. But he expects the cost savings of the new service to convince most of them to sign up for Starz Play, particularly since Verizon is offering a 14-day risk-free trial. Vongo subscribers on average downloaded 8-10 movies each month, he added.

“They’re going to get a 40% savings, so I would like to think that most folks will at least kick the tires on it,” Becker said.