November 28, 2016 2 years 10 months ago

Hollywood Suite says its ready for a la carte and is thinking about original content

TORONTO — Since launching five years ago with 11 full-time employees, under the leadership of Canadian TV industry veterans Jay Switzer and David Kines, commercial-free movie service Hollywood Suite has slowly but surely been growing.

After rejigging its original studio-focused channels a year ago and rebranding them as a quartet of decades-focused channels in anticipation of the rollout of the pick-and-pay regime, company executives believe the company is well positioned for the new market reality of a la carte TV channel choice.

Despite continuing to be small in stature, now employing 14, Hollywood Suite’s success shouldn’t come as too much of a surprise, given the combined experience at its helm. Co-founder and chairman, Jay Switzer, is the former CEO of CHUM Ltd. (2002-2007) and co-founder David Kines was instrumental in the launch of MuchMusic, Canada’s first music video channel, in 1983/84. During his time at CHUM, Kines worked his way up to the position of senior vice-president and played an integral role in the launch of MuchMoreMusic in 1998, among other channels.

As one of only a handful of independent media companies left in Canada competing against the big vertically integrated players dominating the market, Hollywood Suite has been able to use its size to advantage, Kines (pictured below) said in an interview with Cartt.ca.

“Overall, I think our advantage is we’re small, nimble, not distracted or conflicted by any other parts of the business, i.e., we’re not vertically integrated. Our singular focus is running our channels and serving our customers. In terms of future development, we’ve got a few exciting announcements coming. As we grow, it lets us spread our wings even a little bit further,” he said. “And, you know, do we want to be the next HBO? Sure. So we’re growing.

“It’s growing day by day, month by month, and getting to that place where we’ve got room to commission originals and find other ways of reaching customers.” – David Kines, Hollywood Suite

“It’s growing day by day, month by month, and getting to that place where we’ve got room to commission originals and find other ways of reaching customers,” Kines said.

Since its launch in 2011, Hollywood Suite has had 54 consecutive months of growth (this takes into account the company’s three-month free preview of its channels at launch and only includes data up until August 2016, the last month it has data for). “You can probably add another month on [to that number],” Kines said. “We’ve grown every single month for the last five years.”

As a privately held company, Hollywood Suite doesn’t report publicly its subscriber numbers, but Kines told Cartt.ca the company’s subscribers now number in the “hundreds of thousands”. Almost all of the company’s subscribers (99.9%, Kines said) have taken the four Hollywood Suite channels (HS70, HS80, HS90, HS00) in a bundle, rather than subscribing to the individual channels. (This is borne out in its CRTC filings, where revenue for each of the channels are near identical and together topped $5.7 million in the last broadcast year)

Kines pointed out Hollywood Suite has always offered a la carte wholesale pricing for its channels to BDUs, but very few BDUs have offered the channels a la carte, preferring to bundle and offering them on VOD. Most BDUs have not been set up mechanically to handle the customer channel selection and billing process until now. Once a la carte becomes mandatory on December 1, BDUs will have different packaging options that they will roll out in the coming weeks.

“We tried to be very flexible and consumer friendly [with channel pricing],” he said, adding that in six months’ time Hollywood Suite may have some meaningful a la carte channel subscription numbers to report.

“From the value perspective though, and this is the challenge that our entire industry faces, our efficiency in our operation comes from putting the packaging together. So we’re happy to offer them a la carte, but the greatest value for us and the consumer is to sell the suite,” Kines said. “We’re already available in some places a la carte, and at $3 or $4 a channel, you just have to like two of them and you may as well get the $5 or $6 bundle.”

He added Hollywood Suite will be watching the market to see how things unfold from a pricing perspective as all Canadian channels become available a la carte in December. “We’ll see how business is, and the BDUs are our partners in this regard. We’re a wholesaler, they’re the retailer. So we have to work with them to find the right (approach) because it’s a mutually beneficial relationship,” Kines said.

Through its relationships with various BDUs across the country, Hollywood Suite’s channels are available to 9.5 million households in Canada. The company has agreements with about 25 different BDUs, both major and smaller ones, with the exception of Vidéotron.

“We’re available in Quebec on Bell and Shaw and others, Cogeco, but not Vidéotron,” Kines said.

Earlier this year, Hollywood Suite launched the web version of its video-on-demand service, which was already offered via BDUs’ set-top boxes and via a mobile app. “When you subscribe through your BDU to Hollywood Suite, you get access to the on-demand content as well as the four linear channels,” Kines said. In addition, with many BDUs, but not all of them, customers get authenticated subscriber access to the same content on the HSGO app, available for Android, iOS and browser viewing.

Making Hollywood Suite’s content available on demand online is about providing value to its linear channel subscribers, Kines said. At this point, Hollywood Suite is not selling direct to consumers, but that could change in the future.

“Somewhere there’s a 35mm print but it may not have been transferred to HD, so trying to find some of those classic Canadian films is difficult.” – Kines

One of the impacts of the Let’s Talk TV proceeding relates to Canadian content requirements. At launch in 2011, Hollywood Suite’s original four channels had a Canadian content requirement of 15%. After Let’s Talk TV, licence holders now require 35% Canadian content, which can create some problems for specialty channel operators, especially for HS70 and HS80 brands.

“Where we’ve had challenges is finding the older stuff, and that’s both from a rights perspective and also a materials perspective, because not a lot of them released in the ’70s and ’80s, or even the ’90s, were ever transferred to HD television. Somewhere there’s a 35mm print but it may not have been transferred to HD, so trying to find some of those classic Canadian films is difficult,” Kines said.

As a result, Hollywood Suite has often needed to program its HS70 and HS80 channels with more recent Canadian movies to ensure Cancon requirements are being met on those channels, Kines said. “Again, it’s not for lack of trying,” he explained. “There are some good films in the ’70s and ’80s. It’s trying to find them — A that are cleared, B that have HD. But even then, we are running stuff that’s not in HD, some Canadian content, because the desire to have the film supplants not having it available in HD.”

Among Hollywood Suite’s biggest suppliers of Canadian movies is eOne Films Canada, along with film distribution companies run by filmmaker Ron Mann (Films We Like) and former rock journalist Jonathan Gross (Unobstructed View, formerly Video Services Corp.).

“We’re big believers in Canadian content. We’re probably the biggest buyer of Canadian films in Canada,” Kines said, adding that for National Film Day, Hollywood Suite will run all four of its channels with all-Canadian content. “And so, would we be commissioning Canadian content in the future? Absolutely.”