Behind the scenes of Shomi’s shutdown: Is this the next stage of Hollywood North?

“Hey Shomis,” said Shomi general manager David Asch. That jingle marked the start of every team meeting at the jointly-owned Rogers-Shaw streaming service, but former Shomi employee Cassandra James, noted something different in his voice that afternoon.

“It was almost like he told us that our pet had died,” she remembered. She strolls into our meeting with her hands in the front pocket of her hoodie. After she reaches across the table to shake my hand, she recalls the day she found out that Shomi was shutting down.

“I actually left. There’s this thing with my anxiety that I don’t like people witnessing my emotions,” said James. She left the room immediately after hearing the news and headed to the washroom to wipe away the tears and splash cold water on her face. Upon leaving, she noticed several colleagues lined up outside the bathroom for what she presumed to be the same reason.

If content rules, Netflix is King

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At this point, Shomi had been operational for two years and was the first English-language streaming service to launch in Canada after Neftlix. The two services were extremely similar in almost every way, from functionality to price. Some would even say that with Shomi’s cable box availability and $0 price tag with Rogers as of 2015, Shomi was the better choice for millions of Canadians, though it still lacked the extensive library of Netflix.

When Shomi employees came into work on September 26th, they had no way of knowing it would mark her company’s final month in existence, however, they had plenty of clues. Funding to several departments at Shomi were cut this past August. Not slashed — cut. The 100-person team lost several large content agreements, and slowly but surely, Rogers stopped promoting Shomi to its customers.

As James and her colleagues received the news, two HR representatives from Rogers were standing next to Asch, at the front of the room. The faces of her coworkers changed from worried to shocked as they realized that not only would Shomi shut down at the end of November, but that everyone working on the platform would also be let go. After recently leaving another career, she was nervous she’d have to switch careers for the second time in just a few years.

It was at this moment that James turned to her direct supervisor for comfort, but stopped short. It was the first time she’d ever seen her boss cry.

“It’s hard when you don’t have the same funding [as Netflix].”

They were told by their superiors that though they’d done everything they could, the fledgling video service just couldn’t compete with Netflix. James described the news as a punch in the stomach, but this also marks Canada’s latest knock out in our longstanding, yet one-sided, rivalry with the American entertainment machine.

Diana Rowe is a mother, a wife and a former employee in Shomi’s marketing department. She’s believes that Shomi’s fall has to do both with brand recognition and resources.

“I think Canadian brands have to figure it out. How do you build products that people gravitate to? It’s hard when you don’t have the same funding [as Netflix]. It’s almost a niche thing if you’re trying to support Canadian products,” said Rowe.

When it comes to culture, Canada is the baby of the family

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In many ways, Canada is still coming of age in the digital video streaming era. Unlike our trailblazing southern neighbour or our distant English cousins, Canada’s formative years have seen unprecedented access to culture and content from around the globe. This often pits our underdeveloped content industry directly against the empirical cultural legacies of the world’s entertainment giants.

“There is an advantage to the Brits and the Americans because they have such an established system,” said Brenda Leadlay, the executive director of the B.C. Alliance for Arts and Culture. She goes on to agree that while Shomi came with her personal Rogers subscription in 2015, she’d subscribed to Netflix for years before that.

When Netflix came to Canada in 2010, no other service in the country compared, though the platform’s launch was somewhat rocky at first. Most on-demand services offered by Canadian carriers at the time were pay-per-watch and any attempts by carriers to introduce different payment models for content services had been shut down by the Canadian Radio Telecommunications Commission.

In contrast, Netflix gave Canadians a vast catalog of content to consume at their leisure, for a low flat monthly fee. One pay-per-view movie purchase from Rogers at approximately $7 would match an entire month’s worth of Netflix access.

Canada’s strict net neutrality laws prompted the CRTC to chastise services like Videotron for promoting their own content through the use of data caps — discussions which prompted hearings about differential pricing and zero rating in Canada’s wireless future.

Having dedicated her life to the arts, Leadlay believes that awareness of Canadian content and services should be prioritized over the organic consumer market. She compares it to the colour-blind casting movement taking place in the performing arts world. If Canadian services can’t catch up to the strength of American movements, putting rules in place is the only way to ensure their use.

While Canadian regulators have been debating this, Netflix has penetrated over 5.2 million out of approximately 13 million total Canadian households, and likely added over one million Canadian customers in 2016 alone.

Shomi’s death left many questioning whether the digital revolution would simply bring about a new brand of struggling Canadian entertainers in the form of digital content producers. One of the newly unemployed was James who had finally discovered her passion in digital content.

A new phase of struggling Canadian entertainment

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Over 100 former “Shomis” were left with nothing except a vague promise that Rogers would try to hire as many people back as they could.

Rather than take their word for it, the team launched “hireshomi.com” with the hope of helping everyone find a new job as fast as possible. The former colleagues get together often, and refer to themselves as “Shomis” to this day.

As the weeks towards the shut-down progressed, the layoffs came in four waves. The first, which consisted of the 10 to 15-person marketing team, was the hardest, said James. She teared up while explaining that walking through rows of empty desks upon leaving the office that night made it real for her.

The dev-ops were part of the second wave, and James was part of the third. While she was given her end-date in advance, many of her colleagues received their papers on the same day. However, like her colleagues, James believes that with just a few more years, Shomi could have been “neck in neck with Netflix,” at least in Canada.

While the ‘Shomis’ were devastated upon simultaneously losing their jobs and their brand, millions of Canadians didn’t feel the loss as deeply as they did.

By the time Shomi and the Bell equivalent CraveTV entered the Canadian streaming space in 2014, anyone interested in a streaming service had already purchased a subscription with an American giant that had once again beat Canada to the punch.

A report stemming from the CBC revealed that while Netflix is well on its way to achieving 50 percent household penetration in Canada, Shomi had just under 900,000 subscribers — it’s also unclear how many of those subscribers were actually paying a subscription fee — before announcing its decision to shut down. Bell’s streaming service CraveTV recently hit one million subscribers.

Rowe goes on to say that she and her team struggled with their churn rate — the amount of customers that eventually left Shomi for another streaming platform.

She also says that acquiring licenses for content on streaming platforms is difficult when one service is more influential than the other. Content is licensed to platforms on either a regional or exclusive basis.

Canada caught between a cultural deficit and a financial risk

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By the time Shomi arrived on the scene, Netflix had already obtained Canadian licenses for the most sought after content and was also powerful enough to insist on exclusive contracts from providers. While Shomi employees were thrilled to obtain the exclusive regional license for Modern Family, losing Scandal to Netflix’s exclusive contract with creator Shonda Rhimes hit them hard.

Rowe and James both spoke of a plan to one day follow in Netflix’s footsteps by launching original content on Shomi. CraveTV has already put this plan into action. “Original content was in the game plan,” said Rowe.

As someone who was moved from another department at Rogers to work with Shomi, and was later let go, Rowe often wonders if the government could have done more to protect the Canadian service, and whether it had a responsibility to do so.

The CRTC thinks they do, and recently criticized Rogers and Shaw for shutting down the service after just two years.

“Far be it for me to criticize the decisions taken by seasoned business people, but I can’t help but be surprised when major players throw in the towel on a platform that is the future of content — just two years after it launched. I have to wonder if they are too used to receiving rents from subscribers every month in a protected ecosystem, rather than rolling up their sleeves in order to build a business without regulatory intervention and protection,” said CRTC chairman Jean-Pierre Blais during a recent speech at the Canadian Chapter of the International Institute of Communications.

After shuttering the service, Shaw released a financial report that wrote Shomi off as a $182 CAD million dollar operation that yielded only $46 million in revenue over 2016. It’s important to keep in mind that Shaw’s stake in Shomi was just 50 percent, making it reasonable to assume that Rogers and Shaw together spent over $364 million on the streaming service in 2016 alone while generating just $92 million in returns.

Rogers and Shaw were asked to comment on Shomi as part of the reporting for this piece but did not immediately reply. Rogers did, however, begin offering a credit for Netflix immediately after sending out notice that Shomi would be shutting down.

In the meantime, customers can receive Netflix free with Rogers for the next six months and Amazon Prime Video just made its full Canadian launch.

The “Shomis” felt the loss on behalf of the whole country, but for most Canadians, life went on

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While Canadians reevaluate their video streaming options, James adjusts to her new work life at Rogers. While Shomi and Rogers were technically part of the same company, the difference between them couldn’t be wider.

“For example, I just opened up a ticket with I.T. They won’t open that ticket until next week. If I opened up that ticket with Shomi it would be looked at the same day,” she explains.

Her commute to work is no longer a one-hour bus ride to the Shomi offices, but rather a one-hour car trip to the Rogers office in North York. However, the biggest difference is that James no longer feels like someone always has her back.

“It’s kind of like an old Polish grandmother,” she said of Rogers. “They have their one way of thinking and it’s really hard to change that way of thinking. Going to Shomi it was like going to work for your best friend every day. There was nothing against you, there was no belittling you, no micromanaging, nothing like that. It was a different atmosphere altogether,”

Currently, James knows only one person on her team and is still uneasy. While she’s technically been a Rogers employee for the last three years, she’s not as sure of herself within the company.

“At Shomi I always had a friend to talk to. Here, I don’t know if they want to be my friend,” said James.

James never doubted her faith in Shomi’s potential, however, saying that she thought it was “a saving grace for Canada.” Though, she’s begun to doubt Canada’s own sense of identity.

“Since Shomi shut down, I honestly have no clue where Canadian content is going.”

With the wave of American movies, television, music and now digital media, constantly crashing into Canadian homes, many have questioned whether Canada will forever remain a door mat on which Hollywood can wipe its boots.

The names of former Shomi employees interviewed in this story have been changed to protect their privacy.

Comments

  • Squint

    Her description of working at Rogers sounds very familiar to my own. I was there for about almost 2 years… Maybe a bit more… Gross. And it was awful. Toxic environment, with people that just hated being there and people in charge that shouldn’t have been. So glad to be gone from there.

    • MoYeung

      Which department?

  • weetigo

    Well written story and very sad. I also wonder how much Amazon’s decision to move Amazon Prime into the Canadian marketplace played into Shomi’s demise.

  • malingerer

    she said of Rogers. “They have their one way of thinking and it’s really hard to change that way of thinking. Going to Shomi it was like going to work for your best friend every day. There was nothing against you, there was no belittling you, no micromanaging, nothing like that. It was a different atmosphere altogether,” because it wasn’t Rogers…

  • Daniel Bader

    This is wonderful. Sad, but wonderful.

  • Not for you

    This is a great piece, and the comments about the culture at Rogers are telling.

  • Bob Loblaw

    The more the greedy corrupt CAD telecoms suffer, the better. Robellus deserves every ounce of sh!t coming their way.

  • ciderrules

    The biggest problem with Shomi was marketing. All this time I thought it was another cable channel like Showcase or Bravo. I saw lots of ads on TV and also on my cable box, but nothing that explained it was a streaming service like Netflix.

    I see so many offers for new channels (and those tricks they use to get you to sign up, like making it free for 30 days and you needing to cancel to avoid getting billed) that I’ve learned to ignore them when I see them. Shomi promotions did nothing to explain to me it was like Netflix.

    I only found that out after they shut down when there were headlines like “Canada’s Netflix Competitor Shomi To Cease Operating”.

  • QAM_FREQ

    Jessica, first off this is a fantastic piece of journalism, well written, and very fitting to the Canadian experience. Well done!

    Regarding the content of the article:
    1. Some fellow posters have made mention of it already but Shomi failed primarily it lacked the variety and breath of content compared to Netflix – too feeble attempt to go against Netflix that had been around for almost 3 or four years prior, and the cost couldn’t justify value.
    2. Shomi required a Roger’s cable TV subscription if I am not mistaken. This in itself was the most important factor that I did not sign up for it early on.
    3. Just like how Netflix took a year or two to get it right, so too did Rogers. Shomi had a lot of bugs and stability issues early on, this caused a number of my friends to not even continue using the mobile apps when they had the service.
    4. Robellus mentality is defined in your article – Stuck up management whose greed and total lack of understanding with moving ahead with modern day consumerism will continue to fail unless the get with the program.

  • Rimtu Kahn

    “extremely similar in every way”
    Have to disagree extremely vigorously in every way. App availability? Netflix had an app for every smart TV out there. Shomi had no app available for Samsung or Sony smart TV, not sure of others. Netflix had an app available for any box of any kind that one could name e.g. Xbox, ps3, ps4. Shomi? Nope. Netflix offered same pricing for larger content base and original content which set the quality standards so high that few existing TV shows can match it, since Shomi didn’t have any original content they rehashed the stuff. App reliability? Shomi app in Android and ios was as horrible an app experience as it can get. Constant crashing, horrible color scheme, bad UI and UE. High bandwidth requirements despite not having the best quality content to offer (talking about technical quality i.e. 4K, 1080p). Netflix apps were reliable across the board. Few crashes here and there and features functionality all consistent.
    New features, and frequent app updates to resolve issues? Netflix did yes. Shomi not sho much. Android and ios apps were updated rarely despite all the constant issues with them. Netflix offered the profile feature, Shomi didn’t bother.
    Set top box support to save on data. Well for those with unlimited data and at least 60/10 Mbps down/ up this wasn’t a concern. But for anyone with limited bandwidth this was a good idea “on paper” . Because the UI on the STB was horrible, so painful and so buggy that despite wanting to watch some interesting shows on the STB I’d end up quitting after watching 1 episode pulling my hair most of the time. The had white font on Yellow background for the selected items. Enough said. Still not to forget the lack of synch between the STB and the app, so I can’t start on the app and continue on the box or vice versa. End of each episode having to navigate through a painful and slow UI to get to next episode, no auto-continue. It was overall an oMG situation.

    In the end I felt it was more useful praying for Netflix to get the specific show I was interested in from Shomi catalog rather than expect Shomi to improve anything anytime soon.

    My experiences mentioned above were true till the day Shomi died. Well good riddance. I haven’t tried crave but I am guessing based on their better success they are not as bad. At the least I’m seeing crave apps availability matching up with Netflix ‘s.

  • Matt

    Well Rogers lost big time from Rogers video stores when Netflix opened up. Then Rogers was late to the online streaming game. So how can they cry about it now lmao. No one wants to watch content by Cable TV anymore.Nor rent DVD movies anymore either. It’s all about online streaming to get your content you want to watch right away on your own time and without commercials. If we’re gonna pay monthly money we sure as hell don’t want to waste our time watching commercials and reruns over and over again. I prefer to use Kodi to stream everything for free. I also have Netflix. But mostly prefer Kodi.

    • MoYeung

      Kodiak, as in, he freedom of being able to watch any TV show, sporting event or movie, no matter when it aired or was first released, with a few clicks or taps — at absolutely no cost to you — on your television set, desktop computer or mobile device. No cable plan required. No Netflix subscription needed. No nothing, save for an Internet connection.

  • dooger2

    Just in terms of the prose, this is a very poorly written article. Disjointed sentences, word choices that seem to undermine the author’s point, etc. This needed several more edits and drafts before it should have been published.

  • MoYeung

    I see some employees feel bad as a result of job loss and company re-organization. (you only care about your jobs?)

    What about the subscribers/customers? How do they feel?

  • Kevin Mccormick

    I liked Shomi, and tried it twice, but for me the deal killer each time was the app. It would seldom remember what episode I last watched and often queued a previously watched episode, it always disconnected from Chromecast, if it could even find a Chromecast, or find an internet connection for that matter. It was a slow, bloated, piece of crap. If they ever bothered to look at the app reviews they would have known it was going to become a problem, when the overwhelming amount of user reviews are one and two stars, and everyone is trashing the app, maybe, just maybe, there’s a problem with the app. The had great content, and the marketing team did a fantastic job, but that app was just a frustrating experience. The lesson here is you can have all the content in the world, but if your delivery system doesn’t work you may as well have no content at all.

  • Gordon T

    This article keeps mentioning ‘Canadian content’ that was on Shomi and while I have sympathy for anyone who worked there, they should have known better.
    There was very little Canadian content on Shomi and that includes content that Rogers and Shaw created themselves. None of the shows from channels like OLN, HGTV etc that Rogers and Shaw owned and operated. They also didn’t make all the licensed content that Rogers and Shaw owned available instead holding much of it back for its cable divisions.

    So stop trying to pretend that Rogers is the victim here because of some sort of Cancon issue. Shomi wasn’t trying to be a Cancon hero. They tried to copy Netflix’s early model by licensing expensive American content, but even Netflix had evolved and knew that the future was their own original content.

    Shomi would have worked if Rogers had launched it that first year or before Netflix came into Canada, but instead they were way too late.

    This is what Rogers does, they don’t innovate they just copy and paste other peoples ideas and they do it very poorly.

  • Hollander

    More stories like this would make me read Mobile Syrup even more. Interesting stuff!

  • Loweball

    “Leadlay believes that awareness of Canadian content and services should be prioritized over the organic consumer market”…..What a chilling sentence. I can’t believe people actually think like this. I read this as “people should watch what I want them to watch, not what they’re actually interested in”

    • Brenda

      That was exactly the problem with cable. Shomi was and Crave is a watered down version of cable being sold as a streaming service.

  • Matt

    No wonder Shomi failed, it was run by a bunch of crybabies.

  • jawr

    They were extremely slow on opening it up to customers not on shaw or rogers.
    They never came up with a roku app despite promises. No excuse for this as there are a dime a dozen small operations doing roku apps.
    They had a tonne of home grown, owned by shaw and rogers content that they could have put on shomi.
    They were just incompetent.

  • Homer J. Simpson

    Didn’t read through the entire pathetic little sob story. Here’s the deal, Shomi had a ridiculously buggy app that prevented anyone from watching it anywhere. I gave the free trial a go hoping that I’d get my own subscription to share as my brother had shared a Netflix plan to me. Well I had trouble watching anything. It just wouldn’t play on my laptop. So I tried mobile phone app and it would not allow me to Chromecast even though Chromecast button is available. When I contacted technical support, they constantly put blame onto others. I mentioned the apps failing to Chromecast from my android devices and they asked me to check my Chromecast settings.. when my YouTube or Netflix casted perfectly fine. Then they asked me to try on an iOS device.. So when I did get to try it from an iOS device, low and behold, it wouldn’t cast. I was told to try from my laptop. Well that’s the thing, my laptop would stream for 3 seconds and then some error message that was attempted to be cute and funny. What kind of dev spends time making error messages comical? So when asked what OS I was on, I said ChromeOS. They responded with, Chrome on Windows and Chrome on OSX are supported but not on Chromebooks. So they literally blocked access from Chromebooks so they didn’t have to deal with support? Alright fine, this is a Canadian company and Canadians are pretty anal about putting in the extra effort. So I pull out my windows laptop and managed to stream one episode of a Shomi-exclusive show. After that one episode, I get the exact same problem as my Chromebook. At this point I didn’t want to continue on this whole run around any more. This was a week and a half into my free trial. If the support isn’t interested in actually figuring out the problem and fixing them, there is not a chance I’m staying as a paid customer and waiting for them to fix problems. You build a product and product has a problem, you fix it. You don’t tell customers, maybe it’s OS, maybe it’s your Chromecast, maybe it’s your network setting on your router, etc. Shomi closed. Boo-freakin-hoo. This isn’t about competition from Netflix or amount of content. I would’ve paid for both subscription to get complementary content from one another. I wanted to give Shomi a chance. They royally screwed it up with their terrible service and unwillingness to try and fix issues. So they respond to a ticket much quicker than Rogers does, do they actually accomplish anything or even manage to close the ticket? Hell no.

  • redlow

    First, they were exclusive to rogers subscribers, then when they were open to everyone, there was no Roku app. I emailed saying I would subscribe when they had a roku app, but it never happened. Same problem with crave TV. I want to support Canadian services, but it can’t be inconvenient. I won’t watch on my laptop. Spend some time to make it in your face. If I could have watched shomi on all my devices, I would have signed up..

  • Inhocmark

    Between Rogers and Bell, they have so many quality properties locked up and instead of using then to battle Netflix, they kept them behind massive paywalls. You still can not subscribe to HBO Canada without taking on the crap that is TMN.

  • Timothy Daniel

    I feel bad for the employees who were let go, but this service was doomed from the start:

    1. Price. If you’re going up against an established leader (Netflix), you had better offer something of value. They should have priced it more aggressively to encourage people to try it.
    2. Experience. By most accounts, the software experience was poor. I’ve never had much of an issue with Netflix’s UI. It just works. It sounds like this wasn’t the case for Shomi.
    3. Content. Again, if Netflix has better content, why would people pay the same price for less selection? In addition, there wasn’t any exclusive content that made me want to try Shomi.
    4. Restrictions. Why restrict the application to Rogers-only customers? You’re eliminating approximately half of your audience right away. Bad idea.

    CraveTV is next to go unless they can offer me something better than Netflix. Make me WANT to try CraveTV, or else it’s doomed too.

  • passerby1969

    How is Ezra Levant’s internet channel doing? From my layman’s perspective, the rebel media is doing everything right to grow a new news/commentary site with exclusive Canadian content. Why not more recognition and some public funding?

  • deltatux

    Rogers and Shaw seemed to have hobbled Shomi from the start. If they cared about Shomi, they would have put its complete weight behind it and marketed the crap out of it, made the app better and supported a wide range of devices as well.

    They were to afraid of cord cutters that they killed their cord cutter-centric service.

  • Brenda

    I checked Shomi and Crave programming at one point. Neither came close to offering shows I wanted to watch. Nor does Amazon Prime Video. I’m first and foremost a global citizen. I want to watch movies and TV shows from other countries, not just Canada and the US. Half of what I watch has subtitles. The other half is from the BBC. I’d like to be able to stream shows from France and Spain. Reuters is Canadian. I just wish it and Bloomberg would offer Canadian news channels.

  • Dave

    One problem with shomi, it’s Rogers, for people like me who disliked Rogers (robellus). I will never subscribe to shomi or crave. Want to get us Canadian to like and support Canadian company? Stop gouging your customer ie cell phones rate, shady cable tv bundling! Shomi – good riddance!

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