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In 2017, Canadian cableco Shaw turned around its trend of TV subscription losses, with two sequential quarters of growth – 2Q17 and 3Q17 – reported so far. Shaw attributes this to an offer that includes leading US cableco Comcast’s X1 TV platform, under the name Blue Sky, and introduces a faster internet tier of 150Mbps, along with its recent addition of six months’ free Netflix subscription, which is integrated in the platform. In a time when pay-TV cord-cutting is on the rise, Shaw’s experience proves that the trend can be reversed by offering compelling new bundles.
To increase pay-TV take-up, Shaw is upgrading its bundle with some attractive elements. The new benefits include popular content, such as a free Netflix subscription; the convenience of a bundled offer, integration of Netflix in the STB, and faster internet speeds; and the boost in quality of experience brought by Netflix integration and Comcast’s highly rated X1 platform. These factors increase the perceived value of the dollars being spent on content.
Shaw realizes that it can’t satisfy everyone or stop everyone from cord-cutting, but this particular combination is helping the company shift back to growth in pay TV for the time being. Shaw also has other means of combating the cord-cutting trend for now.
The government-mandated skinny bundles at C$25 (US$19.69) a month are also mitigating cord-cutting by price-sensitive customers. This segment of customers is shrinking, however, as millennials start to become the largest segment of consumers. For them, a preference for consuming content in a certain way is a more important factor than pricing. Some simply prefer to subscribe to OTT/SVOD pay-TV services even if they can afford the higher pay-TV prices.
Offering TV everywhere is another way in which Shaw is working to slow the cord-cutting trend. Along with white-labeling Comcast’s X1 platform, Shaw uses Comcast’s Stream app, renamed Free Range. The flexibility of viewing on-demand recorded and live TV content on any screen adds value for customers.
Although Shaw is being proactive in holding off the cord-cutting trend, Ovum has some further suggestions.
Shaw will need to continue to develop compelling offers to keep as many of its pay-TV customers as possible, because cord-cutting will only intensify over the next few years as millennials become the largest segment of the population – they are forecast to account for 40% of the Canadian population at end-2019. Once a customer is lost, it’s difficult to win them back.
Mobility is most likely the primary service in the minds of millennials. Yet, after acquiring Wind (now Freedom Mobile), Shaw did not integrate mobility in its bundles. By contrast, offering mobility as part of the bundle seems important to Shaw’s biggest competitor, Telus, which currently offers a deal in which customers get a C$500 Visa gift card plus 1GB of extra mobile data if they add TV and internet to their mobility service. And if they order online, they get an extra C$100. This is a big offer, but Shaw could do something as simple as what Sasktel does, which is offer a $10 discount when mobility is added to the package. It could also do something like what Telus does with its skinny bundle offer: discounting the bundle price of C$25 by C$3 is it’s taken with another service, whether mobility, home phone, or internet.
One element of the bundle Shaw doesn’t have to worry much about at the moment is fixed broadband. With no unlimited mobile broadband offers in the market, and no mobile broadband plans with large data allowances at prices that are competitive with fixed broadband, mobile-only broadband is not a viable alternative to fixed broadband. Until this is possible, it is unlikely that the fixed broadband cord will be cut in Canada. Therefore, bundles of some types of content with mobility and fixed broadband could be even more compelling.
Service Provider Markets
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