The last time a company decided not to take competition with Netflix seriously, Blockbuster went out of business and it changed the entire movie-watching industry.
In 2011 the Canadian Radio-television and Telecommunications Commission (CRTC) looked into claims by larger media companies that Netflix was providing “over the top” programming services, which were having a negative impact on their own premium services. At the time, companies like Bell and Rogers were more interested in stifling the competition than stepping up.
Three years and over a million Netflix customers later, Rogers and Shaw are trying to get into the online streaming game. Their new service, Shomi launches in November. It looks like Netflix without the red, provides similar programming, and will initially be available only to existing Rogers and Shaw customers for $8.99 a month.
It seems that Shomi might be missing the point.
Their initial launch is only available to those already paying for television and Internet packages. While it’s true that customers require Internet to use online streaming services, the attraction to Netflix is the low price and this new deal is an add-on to some of the most expensive Internet service on the market. Competing with the low prices and extensive bandwidth of companies like Teksavvy and providing cable customers with something they sort of already have, they’re not even pretending to provide something better or new.
The truth is, both Netflix and Shomi are competing with the lower-quality but completely free practice of Internet piracy. These companies aren’t necessarily asking potential customers to choose between each other, but between paying money and not paying money. Existing Rogers and Shaw Internet customers can already torrent shows using their connection or they can pay for Netflix if they want better streaming and quality. Suggesting they add another $10 to their bill for an unproven service is hardly enticing. Especially for students, who are often on a tighter budget than most.
Competition can definitely improve service and Netflix certainly isn’t perfect—there’s a reason more than 200,000 videos come up when you search for “how to get American Netflix” on You- Tube. There’s an opportunity to provide a better service than the existing one, and with its extensive resources, Shomi should be able to do it.
While Rogers and Shaw have been busy creating a service that appears to be subpar to what’s already available in terms of price and convenience, Netflix has been busy preparing for this moment by creating an arsenal of quality, exclusive content without commercials. HBO has been playing this game for a long time, but its content is only available in Canada through premium cable and satellite packages.
Netflix allows customers to binge-watch shows like House of Cards and Orange is the New Black for a price that’s considerably lower than any package that includes HBO. It’s a much easier sell to convince someone to pay under $10 for exclusive content than convince them not to illegally download Game of Thrones every April because getting cable is expensive and inconvenient (how many students are still waiting for the day the cable company arrives to hook up their connection?).
The Rogers and Shaw business models are changing and that’s for the better. Trying to cling to the expansive cable packages that were profitable in the ‘90s is to pretend most of their customers don’t have a constant Internet connection available in their house and on their phones. The exclusivity of their service is supposed to only be the beta version, but it still seems like a slow reaction to a fast-changing market. It’s great that they’re joining the online streaming world because as consumers we can only benefit from the competition, but they’ll have to adapt and quickly.
Refusing to meet the needs of customers as they arise is short-sighted. It’s almost apocryphal that Blockbuster refused to work with Netflix on providing a streaming service to their customers and then failed spectacularly. With Internet, cell phone, and TV service under their umbrella, Rogers and Shaw are capable of absorbing new technology and there’s a lot of potential with their new service. Let’s hope they can live up to it.