Future of Shomi's content up in the air as service shuts down

[Shomi is shutting down its digital streaming service. (CBC)]

Shomi: nothing. The Rogers and Shaw streaming joint venture has announced it will be shuttering November 30.

“We tried something new, and customers who used Shomi loved it. It’s like a great cult favourite with a fantastic core audience that unfortunately just isn’t big enough to be renewed for another season,” Melani Griffith, senior vice-president of content for Rogers told tech site MobileSyrup.

According to an email to Yahoo Canada Finance from the streaming service, Shomi had “recently approached” 900,000 subscriptions. However, it’s unclear whether or not that takes into account Rogers subscribers who received the service free with their wireless package.

According to Solutions Research Group, a Toronto-based data tracking firm, Shomi is used in less than four per cent of Canadian households.

“I’m not an insider, but their business model is likely not competitive, or even realistic, in an ecosystem trending towards a global delivery model, with Netflix demonstrating unbeatable first mover advantage,” Irene Berkowitz, an expert on the impact of digital media on television and an instructor at Ryerson University’s Ted Rogers School of Management, told Yahoo Canada Finance.

Simply put, Shomi likely has too few subscribers and moreover, only a Canadian footprint, which further limits the potential subscribers. Even at 900,000 subscribers, they wouldn’t be close to Netflix’s five million.

“They likely don’t have revenue or even potential revenue necessary to compete for top content,” she says. “They lack scale and the imperative in the new eco-system.”

But the closure of the streaming service, which will result in a $100 million to $140 million write-down on the Roger’s third quarter, is a peculiar one in Canada’s still-fresh-faced streaming ecosystem.

In the past when a Blockbuster or Jumbo Video closed its doors, cinephiles could make pilgrimages to buy the excess titles at deep discounts — but what happens with all those leftover licenses?

According to an emailed response from Owen McCorquodale, a spokesperson for Shomi: “In regards to the content on shomi, we are in the process of working with suppliers on next steps and the details of which are a proprietary matter.”

The company declined to provide any other details but Berkowitz says the fate of the licenses and rights to that content is a complex situation.

“There may be different exit clauses, penalties, and/or conditions per contract,” she says. “I would hypothesize the risk of continuing was assessed as greater than cost of shuttering.”

With Shomi, which launched in beta in November 2014, typically signing two-year deals for the content, those licenses are likely running out in step with company shuttering.

For Netflix, the impending demise of Shomi will likely go unnoticed but Bell took to the airwaves saying that for CraveTV it’s business as usual.

“There’s no change in the status of CraveTV,” George Cope said in an interview with The Canadian Press. “It’s meeting our expectations, continues to grow and Canadians continue to subscribe to that service, so we’re going to keep competing in that marketplace.”

But whether or not homegrown streaming services succeed, there’s no shortage of global licenses to be had. Berkowitz points out that currently five main streaming services have 50 per cent of global over-the-top content revenue – Netflix, Amazon, YouTube, HBO and Hulu.

“All are strategically positioned for growth with respect to both scale/distribution reach and content creation (so) their presence – or not – in Canada depends on possession of content streaming rights,” she says. “The new eco-system is still emergent and rapidly evolving – watch closely.”