WE HATE THE WORD predictions. Research companies are good at that, but nobody can really predict the future. However, we do like making educated guesses – and now that we’re a month into 2015, we feel we can make some of those with better data than what we could have done before Christmas, when “prediction” articles are so fashionable.
So, here are a few of our prognostications…
Cord cutting will grow. Subscription TV providers used last year’s Deloitte TMT predictions and some middling overall results to show that cord-cutting is not happening – at least not at any level where investors need worry about it.
Well, it’s time to worry. This year’s TMT research shows that while the overall number of hours Canadians spend watching television is basically flat, among those aged 18-35, they are very much turning to streaming and away from traditional television. This will affect subscription TV numbers in more statistically significant ways.
And sports might not save the bundle the way many are hoping. The TMT survey also points to the fact that there is a growing cohort of younger consumers who have little to no interest in sports. Forty-three percent of Americans aged 18-29 reported they do not follow the NFL at all, where only one-third of respondents in the older age groups report the same. We wonder if the NHL is suffering the same fate in Canada, but we haven’t seen any public numbers on that.
Take what you hear about Rogers with a big grain of salt. The upheaval there has just begun and look for rumours of all kinds to fly in 2015. Actually, they are flying already. New CEO Guy Laurence (okay, he’s been there a year now, but he’s still new, still in his honeymoon period and still has 100% support of the Rogers board and Rogers family) has totally renovated the company’s C-suite. This year will likely see those new C-guys really overhaul their divisions.
Communications division president Rob Bruce is gone and in his place are Nitin Kawale, formerly of Cisco, as president of the Business Enterprise Division, and Dirk Woessner was hired away from Deutsche Telekom as president of the Consumer Business Unit. Deepak Khandelwal was hired away from Google to take the chief consumer office post, something Rogers hasn’t had before. Khandelwal is likely on the hottest seat under Laurence, given the CEO’s oft-stated desire to drastically improve Rogers’ customer service. Plus, Jacob Glick, formerly of Google, is the new chief corporate officer, assuming the communications and government relations roles held by Phil Lind, who has retired. In a federal election year, Glick’s job gets even more interesting.
Even the company’s advertising and marketing has changed under Dale Hooper, who was promoted from Rogers Media to be chief brand officer of RCI after former CMO John Boynton was let go in 2014.
We’ve never seen that type of turnover in such a short period of time in a Canadian media and communications company – and all these new leaders were surely not put in place to maintain the status quo. 2015 looks to be a year of upheaval for the folks at Big Red, so don’t believe everything you hear about what’s going on inside from those who struggle to make sense of the changes, or who fall victim to them.
It’s too bad John Cassaday is leaving, because I think he’s right. While Canadians, and Americans for that matter, have looooong complained about the number of channels they must pay for in order to get the programming they want – and regulators on both sides of the border want to break up the channel bundles – Cassaday is correct in saying Canadians really want shows, not channels. The channel brands have value as curators, but people are fans of Property Brother or the NHL and not necessarily W or Sportsnet.
The big companies know this, and that’s why they’ve now bundled their programming under SVOD brands such as shomi, CraveTV and illico. Others are adapting in different ways. Cogeco, for example, is trying to get everything on a set top box by offering TiVo – which delivers Netflix and YouTube to customers’ TVs. We have the service and are fans, despite some of the technical hiccups. Telus’s Optik and Bell’s Fibe TV also have tried to get consumers to use their set top boxes as primary video conduits.
Shaw’s Wi-Fi decision will look better and better. While it won’t be able to sell its AWS spectrum to Rogers, it sure looks as though Shaw made the right decision to walk away from traditional cellular service in favour of Wi-Fi. Its customer churn numbers have improved dramatically and it is winning kudos in the courts of public opinion – where westerners can increasingly find Shaw Wi-Fi everywhere they go.
Look for the company to continue to expand on that, build partnerships so their customers can roam on cable Wi-Fi nets in the U.S. – and maybe even follow in the footsteps of some of its American cable brethren, like Cablevision, which is launching Wi-Fi-only mobile phone service.
There will be a 4th national wireless player, probably led by Wind and using the Vidéotron, Mobilicity and Shaw spectrum, but it will struggle against Telus, Rogers and Bell. Despite surveys which say Canadians want more companies and more choice, they prove by their buying patterns they like handset deals and one-stop shops. Since a standalone wireless provider can’t be everything to everyone, they’ll have to work very hard for reasonable growth. However, that doesn’t mean it can’t build a decent, if small by comparison, business from folks who want to shop around and shun a big three bundle.
However, once that fourth player ties everything together and builds a more reasonable amount of spectrum with the upcoming auctions in 2015, it would be a tasty target to be acquired, perhaps along with Eastlink, by the likes of Verizon or even Google.
But that might take longer than 2015…
Happy belated New Year, everyone!
