Shaw, Rogers ramp up IPTV ef­forts

Shaw, Rogers join move to IPTV

Calgary Herald - - FRONT PAGE - EMILY JACK­SON

The blow from cord-cut­ting wasn’t as bad as ex­pected for Canada’s top two ca­ble com­pa­nies in the last stretch of 2016, but the fi­nal ver­dict on how the $8.9-bil­lion tele­vi­sion mar­ket fared will de­pend on how well TV prod­ucts of­fered by tele­com com­pa­nies per­formed amid in­creased pres­sure from on­line video stream­ing.

Ca­ble gi­ants Rogers Com­mu­ni­ca­tions Inc. and Shaw Com­mu­ni­ca­tions Inc. both beat an­a­lysts’ ex­pec­ta­tions for their tra­di­tional ca­ble busi­ness in the lat­est re­port­ing pe­riod, ac­cord­ing to fi­nan­cial re­ports re­leased ear­lier this month.

They lost 13,000 and 16,000 ca­ble sub­scribers re­spec­tively, a few thou­sand fewer cus­tomers than Bay Street pre­dicted on both counts. Over the full cal­en­dar year, Rogers lost 76,000 ca­ble sub­scribers, down from 128,000 in 2015. Shaw lost 131,000 ca­ble and satel­lite sub­scribers, down from 152,000 in 2015. (Shaw’s re­port­ing pe­riod ended Nov. 30 in­stead of Dec. 30.)

While cord-cut­ting es­ca­lated in the first nine months of 2016, the solid per­for­mance in the fi­nal quar­ter could ease the pres­sure the trend has been putting on the flat­ten­ing tele­vi­sion mar­ket.

Now it’s the tele­coms turn to re­veal whether they con­tin­ued to gain steam with their In­ter­net pro­to­col TV prod­ucts, which have en­ticed sub­scribers away from ca­ble com­pa­nies over the past five years. BCE Inc. and Telus Corp., the ca­ble­cos’ top ri­vals in eastern and western Canada re­spec­tively, re­port their fi­nan­cial re­sults this week and next.

Bell, which re­ports Thurs­day, is ex­pected to add 7,000 TV sub­scribers, ac­cord­ing to con­sen­sus es­ti­mates. The growth is ex­pected to be more muted than last year.

Rogers’ strong In­ter­net ad­di­tions in the pre­vi­ous quar­ter, with sub­scribers of­ten buy­ing bun­dled pack­ages, could have come at the ex­pense of Bell’s wire­line busi­ness given Bell has been more dis­ci­plined with pric­ing, Des­jardins an­a­lyst Ma­her Yaghi wrote in a note to in­vestors.

Telus is sched­uled to re­port the fol­low­ing week. It is ex­pected to add 17,000 cus­tomers, pre­dicts RBC an­a­lyst Drew McReynolds, as Shaw has yet to gain trac­tion with its new TV prod­uct. If both tele­coms post sig­nif­i­cant gains, the in­dus­try could beat ex­pec­ta­tions of ap­prox­i­mately 200,000 lost sub­scribers in 2016 as peo­ple, es­pe­cially those younger than 35, can­cel sub­scrip­tions in favour of cheaper on­line video stream­ing ser­vices.

Shaw and Rogers are both ramp­ing up ef­forts to gain mar­ket share back from the tele­coms with their own IPTV prod­ucts. Af­ter failed and costly at­tempts to build their own ser­vices, both com­pa­nies signed deals with Com­cast to use its X1 plat­form, an IPTV-type prod­uct with novel fea­tures that has seen suc­cess south of the border.

Shaw launched the plat­form in Jan­uary to the de­light of an­a­lysts, who ex­pect to see a de­cline in sub­scriber losses over the next few quar­ters.

It’s tough to “move the mar­ket share needle” given cord-cut­ting, ris­ing con­sump­tion of over-thetop plat­forms in­clud­ing Net­flix and Ama­zon Prime Video and an in­creased pref­er­ence of In­ter­net to TV, RBC an­a­lyst Drew McReynolds wrote in a note to clients. Still, McReynolds said he’s “in­cre­men­tally more op­ti­mistic” that the prod­uct will im­prove con­sumer num­bers since it has In­ter­net of Things ca­pa­bil­i­ties and is up­dated fre­quently.

Rogers plans to launch X1 in 2018.

THE CANA­DIAN PRESS/AP

Get­ting con­sumers to sign up for IPTV ser­vices could help stem can­cel­la­tions for ca­ble com­pa­nies like Rogers and Shaw.

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