Canadian pay-TV operators pull the plug on failed SVOD service shomi

By Jim O'Neill on Sep 27 2016 at 1:45 PM
Canadian pay-TV operators pull the plug on failed SVOD service shomi

Call it The Little Service that Couldn’t; shomi, the subscription video on demand service floated jointly by Canadian cablecos Shaw Communications and Rogers Communications will be shutting down operation by the end of November.

The C$8.99/mo. service just never gained traction with Canadian consumers who found that getting their video from Netflix was easier than from traditional service providers.

Launched as a Netflix killer – or at least an effort to slow down the streaming juggernaut – shomi was met with a barely stifled yawn from consumers. According to Toronto-based researcher Solutions Research Group, as of April, the two-year-old effort and another SVOD service from Bell Media, Crave TV, had fewer than 1 million subscribers combined. Netflix had 5.2 million at the time.

Shomi’s demise wasn’t due to its being unknown, SRG said nearly half (48%) of the Canadians it surveyed “definitely” knew the service and 83% were at least “vaguely” familiar with shomi.

But shomi, which had an admittedly solid content catalog, it had a bevy of current and recent TV titles and had a deal for Amazon’s original titles, could be difficult for consumers who complained about the service initially not being available on all devices (like Roku, some smart TVs and game consoles), and sometimes problematic streaming. It also was playing catch up with a service that had landed early and spread quickly, something shomi – and perhaps Crave – found overwhelming.

There’s also the fact that legacy businesses like Shaw and Rogers have a lot to overcome in terms of consumer disappointments. As one Shaw executive told me a few years ago when we were talking about customer satisfaction (and the lack of same) in the pay-TV industry, Shaw – and its cohorts – have been in the pay-TV business long enough to have disappointed nearly every customer at least once; and that’s a hard thing to turn around.

The lack of adoption of the SVOD service is a significant blow to both operators who, combined, took a write off of between C$151 million and C$191 million (C$51 million for Shaw, which announced the write off in July, and between C$100 million and C$140 million for Rogers, which will come this quarter).

It’s not just that shomi failed (spectacularly), but that it further shadows pay-TV’s future north of the border. Canadians are even more intent on cutting the cord 46% of subscribers saying they’re considering cutting the cord and a whopping 21% saying they’re “seriously” considering it, according to SRG.

Canadian operators have been mandated by the country’s telecom regulator, the CRTC, to offer skinny bundles to consumers, leading up to likely full a la carte offerings.

“I think Shomi had some good promise early on but never really has been able to create the momentum to get enough traction for it to become a stronger brand, to be able to compete with Netflix and also Crave TV,” SRG’s Kaan Yigit told the Toronto Star.

Interestingly, shomi on Sept. 1 signed on ThinkAnalytics to help shomi’s human-powered curation effort.

“We’re really grateful to Canadians who enthusiastically invited us into their living rooms and took us with them on their phones, tablets and laptops,” said David Asch, Senior Vice President and General Manager, at shomi. “The business climate and online video marketplace have changed markedly in the last few years. Combined with the fact that the business is more challenging to operate than we expected, we’ve decided to wind down our operations.”

Stay tuned.

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