Tête-à-Tête: Was Shomi designed to be a Netflix killer, or merely to stop the bleeding?

Welcome to Tête-à-Tête, a series where two of our writers converse on interesting topics in the mobile landscape — through chat. Think of it as a podcast for readers.

This week, Daniel and Douglas debate whether Shomi was really designed to be a Netflix killer, or merely to maintain the status quo?

Daniel Bader: Douglas, I’m looking forward to Shomi, the strange Rogers/Shaw OTT extension of the company’s broadcast assets. It’s part Netflix, part cable add-on, and entirely new. Where is lags behind Netflix is its breadth — the partners could not come to an agreement with Bell, so TMN, HBO and CTV content is a no-go — and its availability, but when Shomi launches to Rogers and Shaw internet and cable subscribers tomorrow, it will certainly change the landscape of Canadian media.

But the question of why Shomi exists still lingers. Is it a Netflix competitor, meant to undermine the US company’s place in the Canadian market by hoarding all the back catalogue content from its current broadcast partners like Disney (ABC), Viacom (CBS), Comcast (NBC) and others? Or does it have a long-term goal of being a value add-on to its customers’ cable or internet subscriptions? Douglas, walk me through this.

Douglas Soltys: I was recently fortunate enough to attend a Shomi demonstration similar to the one you received back in August, but with Shomi’s GM and head of content. To be honest, I was impressed. The app is well-designed, with a smartly designed UX (the search bar built into the logo was a nice touch), great controls and content for kids, and built-in trailers so I don’t have to commit to a show before I commit to a show. Shomi’s heavy emphasis on curation, with themed content collections and a promise that any content in the app has been screen and selected by the programming team – leaves me unconcerned about a lack of a few notable content partners. Unlike Netflix, Shomi isn’t going after the long tail of content, and I appreciate that the content it’s presenting is what they think I want to see rather than content they could successfully negotiate for.

Shomi’s product is as impressive as its business model is frustrating, however. Despite claiming that “the ultimate goal is that every Canadian has access” to Shomi, the reality is that the company is currently not considering offering the service directly, preferring instead to negotiate relationships with the BDU’s of cable and internet providers. With Bell set to launch its own streaming service in 2015, Shomi’s aforementioned “ultimate goal” seems unlikely to be fulfilled.

So while my first thought of the product was ‘this thing could destroy Netflix in Canada’ to ‘how will they ever grab enough marketshare to be successful?’ And then it struck me: Shomi’s true aim isn’t to be a national success, it’s to give Rogers and Shaw customers a viable reason to not choose Netflix. The goal isn’t domination or innovation, it’s to slow the bleeding caused by cable-cutting.

Daniel: One thing that struck me during Shomi’s launch event in August is Rogers’ Keith Pelley, head of content and programming, saying that he doesn’t think Shomi is meant to replace Netflix in peoples’ lives, but augment it, live right next door to it. In other words, he thinks people will subscribe to both.

There does seem to be precedent there: many customers have found themselves willing to shell out $9/month for Netflix alongside $80 cable and $60 internet, and an increasing number of users are paying for digital copies of physical objects — DVD/Blu-ray sales are down, unsurprisingly — so the notion of spending $18 on great streaming content doesn’t sound too bad.

The other thing to think about is this: though Shomi is positioned as a lean-back source for past seasons of shows Rogers and Shaw currently airs on cable, it’s also meant to augment existing VOD offerings included in one’s cable package. Shomi is basically designed to replace the video store, similar to what Netflix has become. I don’t know whether people will be willing to cancel their Netflix subscriptions for the privilege, but there will certainly be a few willing to pay for both. Will you be one of them?

Douglas: I’m skeptical of the potential for Shomi to sit alongside Netflix in homes across Canada. The reason why many homes choose a cable/Netflix combo is because each offers a complementary package, although it is becoming more common to cut cable completely in order to subsist on Netflix alone. While Shomi and Netflix may differ in presentation, and on a title-by-title level, the content is simply not different enough to justify both, despite the small price increase.

As to whether or not I’d pay for both, the answer is simple: I won’t because I can’t. Not being a Rogers Internet or cable customer, I’m restricted from signing up for Shomi’s (paid) beta. And really, isn’t that the point?