‘Breathing room’ for rivals as Shomi exits scene
Netflix shift could be opportunity for Canadian streaming services
Netflix’s emphasis on original content is what ultimately killed Shomi, according to its owners, but some argue the shift could lead to happier storylines for Canada’s remaining streaming services.
Shomi, the two-year-old joint venture between Rogers Communications Inc. and Shaw Communications Inc., will stream its last episode in November. This follows months of speculation that its owners had other priorities after Shaw got out of the media business and wrote down its investment in the streaming service.
In separate statements, the companies said they couldn’t compete in the challenging market where Los Gatos, Calif.-based Netflix Inc. attracts the lion’s share of Canadians who stream video.
Shomi and its main Canadian competitor, CraveTV, operated by BCE Inc., launched in 2014. BCE’s CEO George Cope said the demise of Shomi means CraveTV will compete more directly against Netflix. The company does not release subscriber numbers for CraveTV, but Cope said the service is meeting Bell’s expectations.
Telecom consultant Brahm Eiley of Convergence Research Group said CraveTV now has more “breathing room” to play secondrun television series and movies. “Netflix started as yesterday’s TV but it’s moving into tomorrow’s movies. The cost to create content that way for a Canadian player is extremely high,” Eiley said.
Netflix’s move from its roots as a cheaper substitute for TV to becoming a producer of content is in a sense helping preserve the traditional television model, albeit one that can be accessed online, Eiley said.
Netflix will likely have fewer and fewer reruns as it focuses on production, he said.
“That leaves a huge amount of space for the CraveTVs of the world to survive,” he said.
Even though multiple reports found CraveTV has less brand recognition than Shomi, Eiley and RBC analyst Drew McReynolds expect it could get a bump now that nearly a million stranded Shomi subscribers may be up for grabs. Shomi claims it has nearly 900,000 subscribers, a base that would “likely make Shomi a Top 10 service in North America,” according to a statement from senior vice-president and general manager David Asch.
It’s not clear if Shomi’s numbers represent stand-alone accounts or if they include cable TV customers that were offered a subscription as part of a bundled package. CraveTV would not release its subscriber numbers, but Convergence Research Group estimated it had nearly 1 million subscribers at the end of 2015.
Netflix has an estimated 5.2 million customers in Canada, according to digital consultancy Solutions Research Group, which estimated CraveTV and Shomi had a combined 700,000 customers. Nearly half of Canadian Netflix subscribers also have a television subscription, according to a separate report by research group J.D. Power, indicating consumers are looking to complement existing services.
In Quebec, Quebecor Inc. continues to gather steam with Videotron’s Club Illico, a video streaming service with French titles. It’s available to Videotron subscribers in Ontario and Quebec and boasted more than 266,000 subscribers as of mid 2016, according to financial statements.
That leaves a huge amount of space for the CraveTVs of the world to survive.