September 26, 2016 2 years 11 months ago

UPDATED: Rogers, Shaw, pull the plug on shomi

TORONTO – Shaw Communications and Rogers Communications have decided to shut down their joint Canadian subscription video on demand service shomi after less than two years in operation.

A statement on Monday confirmed that the service is winding down, a process that will be completed by November 30, 2016.

"The business climate and online video marketplace has changed markedly in the last few years”, reads the statement by shomi SVP and GM David Asch. “Combined with the fact that the business is more challenging to operate than we expected, we've decided to wind down our operations."  

The move signals an end to the joint venture between Rogers and Shaw that launched initially to cable subscribers only, and then nationally across Canada over a year ago.  It also marks the first major casualty in the domestic video streaming market, leaving Bell Media’s CraveTV as the sole local, national, player left to combat Netflix Canada.

Speculation over shomi’s future has been well telegraphed, including Cartt.ca’s report last month. Rogers’ move to offer Netflix free for a year as part of a cable bundle was hardly an encouraging sign.  Sources who have seen the figures say shomi never surpassed the 100,000-subscriber mark, however, the partnership itself never made public its subscriber figures. Unlike Bell Media's CraveTV and other global streamers, shomi also did not produce any of its own original content.

Also discouraging was Shaw CFO Vito Culmone telling analysts in July that the company was taking a $51 million accounting charge, thereby valuing its shomi investment at zero, after moving its traditional media assets to Corus Entertainment.  He added that was all that he would disclose "about our future prospects at this point in time in regards to the shomi joint venture." Rogers Communications CFO Tony Staffieri was equally non-committal about shomi's future during his company's own analyst call in July.  Rogers said in Monday's announcement that it expects to incur a loss on investment of approximately $100-140 million in its third quarter ending September 30, 2016 relating to the carrying value of its investment and a provision related to future liabilities in shomi.

Current shomi subscribers may continue streaming and binge-watching TV shows and movies via their Rogers and Shaw set-top boxes and other platforms, including Apple TV and Chromecast, through November.  Rogers spokeperson Aaron Lazarus offered no comment when asked what would happen to the service's content after that date.

Bell Media was quick to reiterate its commitment to CraveTV in the face of rival shomi deciding to throw in the towel.

“CraveTV has grown quickly since its launch in 2014, including our expansion of the service to all Canadians with an Internet account earlier this year,” the company said in its statement Monday.  

"We’ll continue to invest in new CraveTV programming and technology innovation, commissioning more original Canadian productions - like Letterkenny, and Russell Peters Is The Indian Detective - and building upon our partnerships with HBO, Showtime and other premium content brands.” 

With this move, it's a shame that the original Rogers-Bell-Shaw-Cineplex streaming partnership we reported on in 2014 fell apart.