Shomi the Money: a Cautionary Tale in Licensing

Shomi the Money: a Cautionary Tale in Licensing

Pour one out for Shomi, the latest online streaming service to kick the bucket.

Since Netflix cracked down on VPN server unblockers such as Hola and Spotflux, Canadians have been restricted to watching only the titles available for streaming and online viewing within the borders of the True North Strong and Free of NBC content. According to data collected in April 2016, that’s approximately 2,032 less titles to watch than American Netflix subscribers.

Luckily, Shaw Communications and Rogers Communications saw this gap, and quickly jumped to give Canadians what we need. In August of 2015, Shomi expanded availability to all Canadians, with licensing rights to content Canadian Netflix couldn’t provide. Because licensing agreements are so particular and completely at the mercy of the owners, content rights are a hot commodity.

Thanks to Shomi’s parent companies Roger’s and Shaws’ existing relationships with licensees, it hosts exclusive rights to content that Netflix can’t even sign to. Because of licensing agreements with CRTC, Shomi is also required to host more Canadian made content than Netflix. Shomi determines their content with Rotten Tomatoes, IMBD and user feedback. Rather than hosting any titles they can cheaply get the licensing for, (nobody wants to watch the 1974 non hit Earthquake, NETFLIX), Shomi meticulously selects the content they provide.The Content Team watches all shows and selects the ones they think the people will enjoy the most. They even give subscribers the first two months free! Literally the Canadian response to Netflix. Sign me up, not sorry.

But much like a breezy Canadian summer always shift into a bitterly cold winter, everything comes to an end. Shomi announced early this week that they will be shutting down as of November 30th, 2016. According to David Asch, senior vice-president and general manager for shomi, “The business climate and online video marketplace have changed markedly in the last few years.” Rogers Communications is reporting a loss on investment of  $100 million to $140 million in its third quarter, which ends this week. Only half a million Canadian households use Shomi, whereas 5.4 million use Netflix. Because it’s so new and less popular than Netflix, Shomi couldn’t continue to lose revenue to licensing agreements without gaining more subscribers. And while Shomi is no longer accepting new subscriptions, valued users can continue to binge right until the bitter end. Rest in Peace Shomi, you will be missed.

Harley Burland
Sources

Shomi (2016) http://www.shomi.com/ourStory

Netflix Canada vs. Netflix USA: Why Do We Get The Shaft? (Bolen, 2013)

http://www.huffingtonpost.ca/2013/12/13/netflix-canada-vs-us_n_4435459.html

How Netflix Pays For Movie and TV Show Licensing (Investopedia, 2016)

http://www.investopedia.com/articles/investing/062515/how-netflix-pays-movie-and-tv-show-licensing.asp

Web streaming service Shomi to shut down as of Nov. 30 (The Canadian Press, 2016)

http://www.cbc.ca/news/entertainment/shomi-shut-down-1.3779675

Netflix Canada vs USA (2016)  http://netflixcanadavsusa.netflixable.com/Canadian streaming service Shomi shutting down (Mudhar, Hudes, 2016)

 

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3 thoughts on “Shomi the Money: a Cautionary Tale in Licensing

  1. The latest episode of Canadaland actually had an interesting take on the shut down. In their opinion, Shomi’s business model was flawed and doomed from the start.

    Quick summary:

    Shaw, Rogers, and Bell had acquired all of these digital content rights back in the days when digital content rights had no value. They were just thrown in for free when these media companies were buying cable and syndication rights. But instead of selling them to Netflix when it started taking off, the trio of companies sat on them, eventually planning to create a competitor to the streaming giant. One of their problems was that instead of working together, the three companies split into two different services, Shomi and Crave, thus splitting their subscription base. Their bigger problem though, was that they used Shomi in an attempt to draw people back to cable packages. “Sign up for Shomi and you get Shaw Cable for free” kind of thing. It was a means to an end, and they never really showed themselves to be invested in developing the product on their own. There was no attempt at the creation of original content, there were few new rights acquisitions in the time that they were active, and what is most striking is that as a “Canadian streaming service”, there was no effort made to include Canadian content.

    Looking back on the whole thing (if you trust Canadaland as a source), it seems like such a shame that Shomi existed primarily to try to cash in on a trend. It isn’t enough anymore to just curate libraries of content. Streaming services (netflix, crackle, hulu, and even youtube) are finding success because they are online media producers and not merely providers. This is something that Canada, even with services like Shomi (RIP) and Crave, still lacks.

    Canadaland episode in question: http://www.canadalandshow.com/podcast/short-cuts-cant-compete-wont-try-shomi-story/

    -Robert Michon

    Liked by 1 person

  2. With all the issues of streaming video, trying to get a service similar and better than Netflix is difficult. There are problems with licensing, copyright, subscriptions, legalities, finances, and so on. If you were to find the ‘perfect’ service for watching whatever you wanted there would always be a catch. Eventually, I’m sure that there will be a service that is simple, legal, complete, and affordable.

    Liked by 1 person

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