BCE steps up game with rebranded Crave+ streaming service.
FIRM GAMBLES ON PREMIUM SERVICE, SPENDING MILLIONS ON CONTENT
Much like live sports, the ability to watch the latest Game of Thrones episode on the day it’s released keeps avid fans hooked on their television subscriptions.
But BCE Inc.’s media division is eliminating the need for a TV package to watch current HBO content, making it available to stream on a premium version of its rebranded online streaming platform, Crave.
As of Monday, anyone with an internet connection can subscribe to the bulked up version of Crave (formerly known as CraveTV) called Crave+ for an extra $9.99 plus tax per month, getting access to a library that includes new HBO content and hits from The Movie Network (this channel will also be rebranded Crave — across all platforms).
Crave’s upgrade — and its new price points of $9.99 for the basic service and $19.98 for the extras — comes amid major competition from digital giants Netflix Inc. and Amazon.com Inc.
Disruption from these new players has been tough on Canada’s traditional media. The industry is struggling with declining advertising and subscription revenue as viewers, especially younger households, increasingly cut the TV cord and rely on internet streaming for their entertainment needs.
Bell Media’s local competitors have retreated from online streaming, with Rogers Communications Inc. and Shaw Communications Inc. folding their joint streaming effort, Shomi, two years ago.
Yet Bell is doubling down on Crave. It’s spending millions on content, which is putting pressure on profit margins. In financial results released last week, Bell reported a 2.7-per-cent drop in its media division’s adjusted earnings thanks to the ramp up in HBO and Showtime content for Crave.
Bell Media president Randy Lennox said Crave is playing a long game. He believes the video content business is “completely analogous” to the music industry in 2005, when the death knell was ringing for CDs but few recognized the potential of online streaming.
“That business is exponentially growing, it’s in the hundreds of millions of subscribers, and it’s nowhere near a ceiling,” Lennox said, pointing to players such as Apple and Spotify. “We are so bent and determined on Crave … we’ve been in it for years now, tweaking it, improving it, evolving it, but sticking with it where others haven’t stuck with it because we do believe we’ll come out with a similar trajectory to that of the music business.”
Bell wants its fair share of the Canadian portion of the hundreds of millions of streaming subscriptions Lennox predicts. Meantime, Lennox recognizes Crave is up against traditional TV products, but doesn’t see the offerings as mutually exclusive. Instead, he said Bell is “on both sides of the highway,” with a responsibility to reach customers through the technology they use. “Obviously we’re taking a big swing here in the direct-toconsumer business that will sit adjacent to our traditional business,” he said.
Besides, Lennox said research suggests HBO’s traditional TV subscriber base in the U.S. didn’t deteriorate when it launched its online streaming platform HBO Go.
When it comes to Netflix, Lennox said Crave doesn’t compete so much as it accentuates the service given its different content, which includes HBO, Showtime, Starz, Vice and children’s content. For a modest investment, a consumer can subscribe to both, he said, even though Crave’s premium offering is pricier than Netflix ($10.99 per month) and Amazon Prime Video ($7.99 per month or $79 per year).
Convergence Research’s Brahm Eiley believes Crave+ has a solid chance of racking up the same proportion of subscribers in Canada as HBO Go has in the U.S. He thinks $20 is a decent price for a bulked up offer, especially since there are fewer online streaming options in Canada than in the U.S.
“For sure there’s pent up demand,” Eiley said. “But is this a Netflix killer, is this going to keep Netflix from growing? No.”
Still, he said Bell is dealing with the reality that viewership is shifting online. It’s been “extremely good at locking down a lot of these big programmers and basically being their arm here in Canada.”