CRTC decisions, new streaming services top TV agenda for 2015

It seems all eyes are on the two newest services in the Canadian TV industry. This fall, the country’s biggest telecom and media companies launched streaming services meant to compete with Netflix Inc.’s, and how they end up performing in the coming weeks and months is “the thing that everyone’s watching,” said broadcasting consultant Peter Miller. The industry will be looking at how Rogers Communications Inc. and Shaw Communications Inc.’s Shomi and BCE Inc.’s CraveTV develop, and “whether they do what proponents of those services hope they’ll do, which is of course stem the bleed away from subscriptions to Canadian television services to the likes of Netflix,” he said in a phone interview. Troy Crandall, an analyst with 3Macs, said one indication of their success will be whether companies release subscriber data for the new products. “If they're having good attachment, they'll probably give you the numbers. If they're not having good attachment, you probably won't hear anything about it,” he said in a phone interview. The launch of the streaming services might be a way for the companies to test the waters for “Cable 2.0,” he suggested, which could involve basic packages with add-ons, such as content from Rogers’ partnership with Vice for $10, Rogers’ NHL content for $20 or a Bell add-on with HBO content. “Where it could go is that ultimately it just turns into à la carte cable, essentially, but you're paying the transport costs. You're the one who has to increase your Internet speeds and your bandwidth caps and everything else,” he said. “TV ends up looking a little cheaper to you, but your Internet bill ends up looking a lot more expensive. So in the end, you're still basically paying what you were, or possibly higher, a couple of years ago.” The emergence of the new streaming services, said Barry Kiefl, president of Canadian Media Research Inc., demonstrates a clear “shift from the way programs are going to be distributed, that it’s no longer simply over-the-air, cable and satellite; it’s going to be streaming as well.” That doesn’t mean it’ll be easy going for the new services. Netflix is in three million Canadian homes, and has a robust library of TV shows and movies, Kiefl noted. “If you don’t have the programming content, people are not going to buy the product,” he said. “I remain dubious about Canadian competitors to Netflix. It’s the same old game of Canadians trying to compete with American television, and it’s very tough to do,” Kiefl said in a phone interview. The results of the CRTC’s Let’s Talk TV process, which culminated in a two-week hearing in September, will also be an important development in 2015. CRTC spokeswoman Patricia Valladao said in email the CRTC expects to issue the results by March. “I think people are waiting to see what this Talk TV decision is going to result in, and I think people are hanging in there until then. And then what happens afterward, we’ll see,” Miller said. That CRTC process dealt with key issues such as pick-and-pay TV and simultaneous substitution. Miller said he doesn’t necessarily expect a lot of surprises in the CRTC’s decision, since he’s among those who think the CRTC will not eliminate simultaneous substitution. “Through the hearing, what seemed to happen is that the discussion seemed to shift from looking at simultaneous substitution in its entirety to wondering whether there was an issue with respect to live sports, the Super Bowl in particular,” he said. “I think people think that, in the worst case, the commission might put some restrictions on it in terms of live programming.” Kiefl said that “to make a splash,” the CRTC might make the Super Bowl broadcast with American ads available in Canada. “The simplest way to do that is to say people can order it on a pay-per-view basis,” he said. Similarly, the CRTC has already said it supports unbundling, and Miller said that many participants at the hearing “felt that unbundling was a foregone conclusion, so the issue was how, not if.” The implementation will be complicated, he noted. “No one expects the commission would be able to implement something as massive as unbundling next year,” he said. “You can appreciate that once you change the distribution environment materially for services, that they’re going to have requests in terms of changes to their conditions of licence. You’re going to have a whole bunch of tipping points there that have to addressed,” Miller said, adding that a mandatory offer of skinny basic service could be implemented in the near term. While Talk TV is the big decision of the year (or, as Miller noted, potentially a series of decisions), the CRTC also has two undue-preference complaints on its table. A complaint regarding Bell’s mobile-TV service had the company defending itself as far back a year ago, in a process that continued throughout the year and remained unresolved as of mid-December. Another undue-preference complaint the CRTC must decide on arose out of one of 2013’s biggest stories, Rogers’ $5.2 billion NHL deal, and the over-the-top (OTT) service featuring hockey content the company launched this year. Miller said that complaint could affect the value of sports content. “The large vertically integrated entities, the reason they acquire properties like NHL programming rights is to be able to do certain things on an exclusive basis with them, and if that’s ruled out, then I think that will change the perspective entities have in terms of the value of owning content,” he said. Kiefl said that “early data seem to indicate that not getting the audiences they hoped for” through its NHL deal and that the company could “revisit how they’ve approached this,” such as by reaching a deal with Bell Media’s TSN that would give the channel more access to games. Gord Hendren, president of Charlton Strategic Research, said in a phone interview that “there’s some early signs that they’re below their targets in terms of audience,” but noted that “we have not gotten to the best part of the NHL season.” In 2014, conventional TV had a rough year, and Miller said that “the plight of local TV” is a “sleeper issue” that could become a political one in 2015 if local stations begin closing. “I’d say that’s a bit of a … wild card,” he said. One issue that made a lot of headlines in 2014 was the question of regulating OTT services like Netflix. While the CRTC dabbled in the topic initially, it later moved away from discussing it —not that it stopped the issue from coming up repeatedly in the Talk TV hearing, and then blowing up during a confrontation between CRTC Chairman Jean-Pierre Blais and a Netflix representative. While that was resolved with a resolution to delete Netflix’ and Google Inc.’s input from the record, and Blais later said regulating Netflix was the least of his worries, it’s an ongoing issue faced by other countries, and one that Miller said could re-emerge in 2015. — With reporting by Anja Karadeglija at akarad@thewirereport.ca and Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

CRTC decisions, new streaming services top TV agenda for 2015

Broadcast | December 17, 2014

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CRTC decisions, new streaming services top TV agenda for 2015

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