Tuesday, September 27, 2016, 10:52 AM ET|Posted by Will Richmond
Yesterday, Canadian streaming service shomi (pronounced “Show Me”) announced that it was closing down as of November 30th. The news came just two years after its launch by two of Canada’s largest pay-TV operators, Shaw Communications and Rogers Communications. shomi’s future was in jeopardy ever since Shaw essentially exited the content business by selling all of its TV networks to Corus Entertainment for C$2.65 billion in April in order to focus on its pay-TV and broadband businesses. Shaw subsequently took a C$51 million write down for shomi. Rogers will now take a C$100-C$140 million hit.
Still, shomi had a roster of hundreds of TV shows, had come out of the gate strongly and was priced appropriately at C$8.99/month. shomi competed with Bell Media’s CraveTV, which also has a deep TV library, is priced at C$7.99/month and has been available to all Canadians since January.
But the gorilla of the Canadian SVOD market is Netflix, which Solutions Research Group estimates has over 5 million subscribers, compared to less than 500K for shomi. Canada was Netflix’s first international market, which it entered in September 2010, albeit clumsily.
As Netflix has expanded its content library and extended its brand internationally, it has steadily raised the bar for other SVOD competitors to gain awareness and subscribers. For many viewers, Netflix has become the first choice for inexpensive ad-free streaming, so others need to spend more to keep up.
Clearly, in shomi’s case, the owners understood these challenges, and after investing tens of millions of dollars, realized it was too tough a road to hoe. An interesting question is how things will play out for SVOD competitors in other countries around the world where Netflix has more recently launched. Will they too find it difficult to compete with the Netflix brand, or will they find clever ways to leverage existing customer relationships and access to content?
shomi’s demise shows just how far the SVOD market has progressed in such a short time. Netflix only launched 6 years ago in Canada, yet in that short time has been able to build a strong enough business to repel a well-funded competitor backed by two of the country’s strongest media companies. Netflix would no doubt like to get wins like this in other parts of the world.