PREMIUM FOR ALL

Starz is democratizing premium-TV subscriptions for people without credit cards

Obsession
Glass
Obsession
Glass

Premium-cable network Starz has a strategy for winning the streaming-video war, and it doesn’t involve the colossal task of outspending larger rivals HBO, Netflix, and Amazon on big-budget productions.

The network instead plans to offer its premium-TV services to more lower- and middle-income households, including the nearly one-third of US adults who don’t have credit cards.

To reach these “underbanked” consumers, Starz, which was recently acquired by Lionsgate, is going to issue pre-paid subscription cards that will allow people to pay for the premium-streaming service without using credit cards, Variety reported. CEO Chris Albrecht, who announced the move at the Recode Media conference on Feb. 14, said the cards should be on the market sometime early this year.

The plan builds on Starz’s programming strategy of catering to audiences that are seen as being “underserved” by premium channels, such as African Americans and women, with shows like Power and Outlander.

Removing the credit-card payment hurdle could also bring Starz’s movies and TV shows to a whole new audience. As of 2014, the most recent year of available data, 29% of US adults did not own credit cards, up from 22% in 2008, according to a Gallup poll. The share is even higher among millennials, who are more likely to use streaming services. A 2016 Bankrate survey found that 67% of Americans ages 18 to 29 didn’t own credit cards.

But pretty much all major streaming-video subscriptions, including HBO Now, Showtime, Netflix, and Hulu require a credit card, debit card, or PayPal account—which is often linked to a credit card or bank account—to sign up.

Currently, to access Starz, customers have two main options:

  • Add the network on to a pay-TV package for around $10 to $15 a month, depending on the package and provider.
  • Or, subscribe to Starz’s standalone streaming package for $8.99 a month with a credit card or PayPal account. (Amazon Prime members can also add Starz on to their subscriptions at the same rate via Amazon Channels.)

Starz’s standalone streaming offering, which launched last April, bypasses the barrier of costly pay-TV packages. And, at $8.99 a month, it’s cheaper than HBO’s and Showtime’s offerings, which cost $14.99 and $10.99 a month, respectively. The service would be even more accessible with a payment option for consumers who don’t have credit cards.

The initiative also speaks directly to one of Starz’s reported target demographics—households with income under $50,000 a year. About 28% of households with annual incomes of $50,000 or less use pre-paid cards, Quartz’s Melvin Backman previously reported.

One obstacle Starz is still working out is how to keep these customers around in the long run. It’s reportedly debating whether to allow them to purchase longer periods in addition to month-long subscriptions, according to Variety. Showtime, for example, allows customers to pay for a year’s subscription upfront.

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