The decision by Canadian cable operators Shaw Communications and Rogers Communications to shutter Shomi, their jointly owned subscription video-on-demand service, is the latest example of pay TV’s difficulties in going head-to-head with SVOD juggernaut Netflix.

Shaw and Rogers launched Shomi about two years ago, originally as an add-on to their respective pay TV services. Last week Shomi senior vice president and general manager David Asch confirmed that the service would cease operations on Nov. 30.

“The business climate and online video marketplace have changed markedly in the last few years,” Asch said in a statement. “Combined with the fact that the business is more challenging to operate than we expected, we’ve decided to wind down our operations. We’re proud of the great service we created and the role we played in the evolution of Canada’s video landscape.”

Other factors influenced the decision, including fierce competition with Netflix; what some critics saw as high prices, compared to the competition; and limited program offerings. Rising programming costs also likely played a role, according to Pivotal Research Group CEO and senior media and communications analyst Jeff Wlodarczak.

CONTENT COSTS HUR

 “Competing against Netflix and Amazon Prime is quite difficult and the amount they spend on programming, already massive, is only going up,” Wlodarczak said.

Those rising costs are evident in the C$100 million to C$140 million write-down Rogers said it expects to take for the service in the third quarter ended Sept. 30. Shaw took a C$51 million write down for its part of the joint venture in July.

Regulations also played a part, according to Canadian research company Convergence Research. Last August the country’s chief regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), revised its videoon- demand regulations to include a new category — hybrid VOD — that would remove content restrictions on the service while making it available to all Internet-service providers.

On the surface, opting for the hybrid VOD designation seemed like a good tradeoff. Under that designation, Shomi wasn’t required to reserve a set amount of shelf space for Canadian-produced programming. But the regulation also required that consumers could buy the service without being customers of Shaw or Rogers, as the service had originally required.

“They defeated the purpose of the initial plan, which was a way to retain customers,” said Convergence Research president Brahm Eiley.

Eiley added that outside market forces — mainly Shaw’s sale of its Shaw Media content business to subsidiary Corus Entertainment in January for C$2.65 billion, and its recent purchase of wireless carrier Wind Mobile — also influenced the decision to shut down Shomi.

OTHER PRIORITIES

“They had other fish to fry,” Eiley said. “The upside of selling wireless to Shaw’s base of over 3 million subscribers, many of whom are already bundled, is a much larger and more important market opportunity.”

The shutdown also presents other opportunities for Shaw to sell its content.

“This touches on program rights and what’s the best way to leverage them,” Eiley added. “Corus and Shaw were sitting on many more of those rights. Now they are in a position to sell them to someone else, not just themselves.”

Shomi has about 900,000 subscribers, but according to reports in the Canadian press, many of those were Shaw or Rogers customers who received the service as part of their TV or Internet package at no additional charge. Others had to pay C$8.99 per month for the service, which some critics said wasn’t competitive to Netflix’s monthly charge of C$9.99.

Adding to the pressure has been Netflix’s shift from a content aggregator, stockpiling episodes of old TV shows, to a producer of original, exclusive content. Eiley said as Netflix has beefed up its programming lineup with popular original like House of Cards and Orange Is the New Black, its past perception as a replacement for traditional TV is changing.

“In a way, that’s not where the battle is anymore,” Eiley said, adding that customers are becoming more attracted to services that have content they can’t get anywhere else.

That is especially true in Canada, where Netflix has about 5.2 million subscribers and is growing at a faster pace than in the U.S., according to Eiley. Netflix has to rely more heavily on the strength of its own originals north of the border, because it has fewer programming rights in Canada.

Canadians have access to about half of Netflix’s U.S. library content, Eiley said, mainly because rights in that country are tied to different providers. However, that is up from about 20% to 25% just a few years ago.

Shomi does offer network TV content such as Modern Family, The Blacklist and New Girl, as well as exclusive Canadian rights to Amazon Studios’s Transparent, Fox’s Empire and Starz’s Blunt Talk, but it didn’t have enough original content to compete with Netflix. That, Eiley said, is becoming increasingly important in today’s climate.

“The market has changed,” Eiley said. “It’s not as though those replacements for [traditional] TV are seeing big numbers either.”

Canada’s OTT scene is much different from the U.S. Not only does Netflix have a thinner offering, but Amazon Prime doesn’t offer a streaming-video service in Canada and Hulu doesn’t operate in the country. For over-the-top offerings, Netflix, Shomi and Bell Canada Enterprises’s CraveTV are pretty much the biggest games in town.

BOOST FOR CRAVETV

The departure of Shomi should give a boost to CraveTV, which has the added cachet of providing library programming from HBO and Showtime.

CraveTV has about 1 million customers and similar to Shomi started out as an add-on for its pay TV parent — Bell Canada — before being made available to all consumers with an Internet connection earlier this year. Eiley said CraveTV would likely get a boost from Shomi’s demise, helped by its HBO programming.

“It gives them, both Crave and Netflix, a little more breathing room in Canada,” Eiley said.

Shomi, the subscription VOD joint venture of Canadian service providers Rogers Communications and Shaw Communications, announced Monday that the multiscreen streaming service will be shutting down operations as of Nov. 30.

Shomi, which has been competing in the market against SVOD rivals such as Netflix and CraveTV, launched across Canada in August 2015 and sold for C$8.99 per month. A beta version of shomi debuted in November 2014.

RELATED: Shomi Opens Up

David Asch, SVP and GM of shomi and an exec who is late of Redbox, Frontier Communications and InDemand Networks who took on the day-to-day of the service in mid-2015, said several factors contributed to the decision.

“We’re really grateful to Canadians who enthusiastically invited us into their living rooms and took us with them on their phones, tablets and laptops,” Asch said, in a statement. “The business climate and online video marketplace have changed markedly in the last few years. Combined with the fact that the business is more challenging to operate than we expected, we’ve decided to wind down our operations. We’re proud of the great service we created and the role we played in the evolution of Canada’s video landscape.”

Shomi’s been optimized to run on several platforms, including Shaw and Rogers set-top boxes, Web browsers, smartphones and tablets, Xbox 360 and Xbox One consoles, the PlayStation 4, and Apple TV (via AirPlay). Earlier this month, shomi announced it had selected ThinkAnalytics for the service’s search and recommendation engine.

Shomi has not announced subscriber totals, but in an interview last fall (subscription required), Asch said the sub base was “ahead of where we expected them to be in our business plan.”

UPDATE: Shomi on Tuesday (Sept. 27) released a statement from Asch saying: “We recently approached 900K subs and even today we are not far off that number, which would likely make shomi a Top 10 service in North America.” 

Asch had said last fall he was also hopeful that content Netflix did not have, such as Amazon original Transparent, would help shomi stand apart in the market.

Shomi recently released some other data points – 17,698 episodes available to stream, 118 total series available, and 143 million total video plays. 

For fiscal Q3, Shaw disclosed it recorded a $51 million impairment of shomi.

Shomi, the subscription VOD joint venture of Rogers Communications and Shaw Communications, has selected ThinkAnalytics for a personalized search and recommendation engine as part of a plan to drive usage across the multiscreen offering.

Shomi will use ThinkAnalytics’s platform to complement and enhance shomie's existing recommendation/curation system that uses hand-picked titles.

The new engine shows personalized recommendations by learning about subscribers’ behavior and previous viewing preferences. Its “you will love,” “you may like,” and “more where that came from” picks integrate editorial selections, mood-based analysis, and results from multiple use cases, such as binge viewing, they said. Shomi supports both English and Canadian French.

The platform is running across shomi’s various platforms, which include set-top boxes, Web browsers, smartphones and tablets, Xbox 360 and Xbox One consoles, the PlayStation 4, and Apple TV (via AirPlay).

“After reviewing the products available, we knew, based on their leadership in the market, proven track record, and positive customer references, ThinkAnalytics would enable us to take shomi to the next level of consumer experience,” said Ann Tebo, shomi’s senior director, customer experience & insights, in a statement.

Shomi, which competes in the market with Netflix and CraveTV and costs C$8.99 per month, launched across Canada in August 2015.

Shomi has not announced subscriber totals, but recently released some other data points – 17,698 episodes available to stream, 118 total series available, and 143 million total video plays. Adam Sandler and Shailene Woodley are the service’s most-searched actor and actress.

Elemental Technologies, the streaming video specialist acquired by Amazon Web Services last year, said shomi is using its cloud-powered platform to power its multiscreen SVOD service for over-the-top devices and set-top boxes.  

Elemental said shomi, the joint venture of Canada’s Rogers Communications and Shaw Communications, helped the SVOD service launch and pass subscription targets during its first year of operation. Shomi launched across Canada in August 2015, but has not announced subscription figures for the C$8.99 per month offering. 

Elemental Cloud’s platform, in conjunction with the Amazon Simple Storage Service (Amazon S3) and Amazon CloudFront, is helping to underpin shomi’s streaming service, which recently added the Xbox One to its growing list of supported devices. 

Elemental noted that shomi uses the vendor to manage, process, and package large batches of file-based video content for both OTT and VOD delivery. Adaptive bitrate assets are then packaged with corresponding digital rights management (DRM) schemes and stored on Amazon S3 for output to an Akamai content delivery network for a variety of connected devices. 

Shomi, the multiscreen SVOD service from Canadian operators Rogers Communications and Shaw Communications, has expanded its platform repertoire by launching an app for the Xbox One.

Shomi’s interface for Xbox One is powered by the You.i TV, which is also underpinning shomi’s apps for iOS and Android devices, as well as the SVOD service’s recent debut on the PlayStation 4.

“We’ve heard from many shomi members and Xbox One users that this launch is something they’ve been waiting for. We’re thrilled to have shomi available on this popular platform,” Ann Tebo, shomi’s senior director, customer experience & insights, said in a statement. “We continue to work tirelessly to make shomi available everywhere our members are looking for great entertainment.”

In addition to the aforementioned platforms, shomi also runs on Web browsers, set-top boxes from Rogers and Shaw, Xbox 360, Apple TV, and Google Chromecast streaming adapter.

Shomi launched across Canada in August 2015. The service costs C$8.99 per month. 

Shaw Communications’s cable and satellite TV subs will have direct access to CraveTV, a subscription streaming service, for $6 per month after striking a deal with Bell Media.

Shaw, which backs competitive subscription streaming service shomi via a partnership with Rogers Communications, will offer CraveTV on multiple platforms, including its FreeRange TV app, which is powered by Comcast’s X1 platform, as well as CraveTV’s apps for iOS, Android, Apple TV, the web (www.craveTV.ca) and Samsung smart TV and Blu-ray players.

"By bringing CraveTV together with shomi and live television on-the-go, we have made FreeRange TV the most compelling television viewing app available to Canadians with the most content available anywhere," Jay Mehr, EVP and COO of Shaw, said in a statement. "We're in a world where customers are looking for the best opportunities to enjoy content and FreeRange TV with CraveTV and shomi delivers."

CraveTV offers more than 11,000 “assets,” including more than 300 series, and counts HBO and Showtime among its content anchors. It’s also offered via partners that include Eastlink, Telus Optik TV, Bell Fibe TV, Bell Satellite TV, Bell Aliant FibreOP TV,Access Communications, Northwestel, SaskTel, Cable Cable, Hay Communications, Mitchell Seaforth Cable TV, Tuckersmith Communications, Wightman Telecom, NRTC Communications, WTC Communications, Tbaytel, Execulink Telecom, and VMedia. 

Shomi, the multiscreen SVOD service from Canadian operators Rogers Communications and Shaw Communications, has expanded access to the Sony PlayStation 4.

The service, which launched across Canada  last August, is also offered on Web browsers, Android and iOS smartphones and tablets, Rogers and Shaw set-top boxes, Apple TV (via AirPlay), the Xbox 360, and has been optimized for the Google Chromecast streaming adapter. The shomi site notes that the service is “coming soon” to the Xbox One.

“Members have been asking for shomi on the PS4 system since we launched, and I’m thrilled we are now able to provide our service on this platform,”  Ann Tebo, shomi’s director, product management, said in a  statement. “With the addition of the PS4 system there are now four Internet-connected ways for members to get great shomi content on their TV screen.”

Update: You.i TV of Ottawa said shomi's deployment on the PS4 is the first app from the vendor to launch on a game console, and that it uses the same codebase that powers shomi's apps for iOS and Android devices. 

Shomi, which is tangling with Netflix in Canada, costs $8.99 per month, though new shomi customers are in line for a two-month free trial. Rogers introduced a major 4K initiative last year that will offer movies and TV shows on shomi in the pixel-packed format.

Nearly half (45%) of all TV viewers in Canada now use an OTT service such as Netflix, shomi, Crave TV or Club Illico, according to a new survey from Media Technology Monitor. 

Canadian MSO Rogers Communications has launched an ambitious 4K initiative that includes a new set-top box, OTT streaming from Netflix and Shomi, live 4K broadcast TV coverage of select sporting events, and a gigabit broadband service to help tie it all together. 

Next year, Rogers said customers will gain access to more than 500 hours of 4K fare, including all 81 home games of the Blue Jays in HDR format on Sportsnet; more than 20 NHL in 4K on Sportsnet starting with the January 23 matchup of the Montreal  Canadiens and  Toronto Maple Leafs (also on Sportsnet);  and more than 100 hours of 4K movies and TV shows from Shomi, the SVOD multiscreen service co-owned by Rogers and Shaw Communications that’s now available across Canada.

Rogers also announced a partnership with Netflix that will support the OTT provider’s 4K lineup that includes originals such as Narcos, Marvel’s Daredevil, Wet Hot American Summer: First Day of Camp, Sense8, Grace and Frankie, Chef's Table, Bloodline, and House of Cards. In an apparent nod to Netflix’s Open Connect private CDN program, Rogers said it will link its network to Netflix servers.

Tied in, Rogers also said it will offer gigabit speeds to its entire footprint by the end of 2016, starting in downtown Toronto and the Greater Toronto Area. That service, called Rogers Ignite Gigabit, will be available to over four million homes when the deployment is complete.

Rogers has set up a web site for subs to get in line for the new 4K TV offering and the Ignite Gigabit Internet service (which will be uncapped), for $149.99.  Rogers.com/4K to reserve.

"4K TV sets have been in the market for some time and 40 per cent of all TV sales are likely to be 4K this holiday season. However, until now live TV broadcasts in 4K have been few and far between and customers have not been able to get 4K set top boxes," Guy Laurence, president and CEO of Rogers, said in a statement.

Fellow Canadian operator Videotron introduced a 4K/Ultra HD set-top in August, and has begun to pilot a gigabit residential service in Montreal that uses DOCSIS 3.0.  

In the U.S., DirecTV haslaunched a limited 4K-VOD service for its Genie platform and Samsung UHD TVs, and Comcast has launched a 4K streaming app for Samsung TVs. Comcast is also developing 4K-capable boxes for its X1 platform. Dish Network is nearing the debut of a 4K service that will run ona new UHD-capable Joey box.

David Asch has been named to oversee the over-the-top programmer shomi, owned by Shaw Media and Rogers Media. His title is senior vice president and general manger and he will oversee day-to-day management, business strategy and growth plans for the streaming service, the companies said. Initial priorities include refining shomi’s content strategy, evaluating opportunities for strategic partnerships and increased distribution, guiding the technology roadmap and preparing the organization for rapid growth, the companies said.

He has more than 16 years’ leadership experience in the media and entertainment industries, the companies noted, with expertise in content licensing, acquisition and development. He also has experience cutting deals with studios, sports leagues and other content distributors. Most recently he was SVP of content at Redbox Automated Retail. Earlier he was SVP, Video, Internet, and Content Services, at Frontier Communications, tasked with managing satellite and IPTV video distribution and partnerships, among other tasks. Before that he was executive vice president at at In Demand Networks.

thePlatform, the Comcast-owned online video publishing company, said it is providing the behind-the-scenes system powering shomi, the multiscreen SVOD service launched in November 2014 by Canadian operators Rogers Communications and Shaw Communications.

Shomi is using mpx, thePlatform’s cloud-based video management system for several key back-end functions, including video ingest, metadata management, subscriber management and viewing rights enforcement. It’s also tapping in for automated publishing across device and video player profiles. Shomi currently supports  the following platforms: Web browsers, the Xbox 360, iOS and Android tablets and smartphones, and on Rogers and Shaw set-top boxes. Shomi will soon extend support for the Google Chromecast adapter. 

Separately, thePlatform said its mpx video publishing system  has been picked by Stan, an SVOD service in Australia jointly run by Nine Entertainment Co and Fairfax Media Limited. Stan’s $10 per month service runs on PCs, smartphones, tablets, and on  TVs via the Chromecast and Apple TV (through AirPlay). 

Other customers of thePlatform  include A+E Networks, BT, Cablevision Systems, Cox Communications, Fox Sports, Liberty Global, Telstra, and Time Warner Cable, among others. 

With one in three English Canadians subscribing to Netflix Canada – according to a Media Technology Monitor telephone survey of 2,002 Canadians – Rogers and Shaw have banded together on their own video streaming platform. Called ‘shomi’ (pronounced ‘show-me’) and due to a beta rollout in November 2014, the video streaming service will sell for $8.99/month; the same price as Netflix Canada’s charge to its new Canadian signups.

shomi, which is nearing its debut even as Comcast shifts its strategy for Streampix and Verizon and Outerwall shut-down their own multiscreen SVOD joint venture, will feature 11,000 hours of TV shows from previous seasons, such as Modern Family, Sons of Anarchy, Sleepy Hollow, Shameless, 2 Broke Girls, Vikings,New Girl, 24: Live Another Day, Chicago Fire, The Strain, and American Horror Story. The service will also offer 1,200 movies, and some first-window premieres. Custom picks will be provided to individual subscribers by programming experts as well as by "algorithmic technology." shomi’s content will be viewable on tablet, mobile, online, Xbox 360 and set-top boxes.

The only catch: shomi will only be available to Rogers and Shaw subscribers; at least initially. As a result, the service will not target cord-cutters who have flocked to Netflix Canada; only hopefully stem the tide of cable subs considering making the move to Netflix.

“At beta launch in November, Rogers and Shaw customers will be able to subscribe to the service in the same way that they currently do to all of the services they receive from these companies – and use the same username and password to access shomi as they currently use to access their online services with Rogers and Shaw,” said Marc Dinsdale, shomi’s GM and senior director. “Subscribers will see the service added to their monthly statement in the same way they currently see their cable, Internet, wireless or other services.”

This gap in shomi’s marketing strategy is glossed over during the service’s public unveiling in Toronto and Calgary on August 26. "We've taken the time to talk with Canadians to find out what they want and to create an unbelievable user experience," said Keith Pelley, President of Rogers Media. "They told us loud and clear – they want all the past seasons of the most popular, current TV shows and they want it to be easy.”

"We keenly understand the media landscape is rapidly changing and that viewers are looking for greater flexibility when it comes to what they watch and how they watch it," added Barbara Williams, Shaw Media’s SVP of content. "shomi is our first step into the new world of content streaming and we're so pleased to be able to bring this made in Canada service to the market."

One of shomi’s biggest selling features is its extremely easy-to-operate user interface. It was created by Ottawa software company You.i Labs, maker of the Kobo Arc tablet interface. You.i’s interactive interface uses "tap-and-hold" submenus, which reduces the number of steps required to select movies. Users can also watch content in a "player window while searching through shomi’s library.

“A great amount of attention and effort was placed on creating a user experience that is more personal and human to our members,” said Dinsdale. “This is reflected in the brand, in the tone of voice throughout the experience, in the content that we have specifically selected for our members, in the user experience that we have created across all devices, and in the selection of technology platforms – all intended to make shomi a simple, understandable and, above all else, pleasurable experience for our members.”

It is impossible to predict just how well shomi will perform against Netflix Canada, and whether Canada two largest cable companies will eventually open up their video streaming service to all Canadians whether they subscribe to cable or not. Nevertheless, shomi’s Marc Dinsdale is optimistic that the new service will catch on. “While we are not in a position to share our membership goals at this time, we have planned for a steady growth in members, content and devices through which shomi will be available, and similarly a growth in the underlying technology platforms and infrastructure to support this growth,” he said.

--Multichannel News technology editor Jeff Baumgartner contributed to this report

Redbox Instant by Verizon, the Netflix-like subscription multiscreen video service, is shutting down on Tuesday, Oct. 7, the joint venture confirmed in this Web posting.

GigaOm first reported about the coming shut-down on Saturday, noting that subscribers were also informed via email earlier in the day. GigaOm reported earlier that Redbox Instant by Verizon had halted new sign-ups in recent months because the service’s monitoring systems had “detected that criminals were misusing our new customer registration process to validate credit card numbers illegally obtained from some other sources.”

The full posting about the coming shut-down reads as follows:

IMPORTANT SERVICE SHUTDOWN NOTICE

Thank you for being a part of Redbox Instant by Verizon. Please be aware that the service will be shut down on Tuesday, October 7, 2014, at 11:59 p.m. Pacific Time.

Information on applicable refunds will be emailed to current customers and posted here on October 10. In the meantime, you may continue to stream movies and use your Redbox kiosk credits until Tuesday, October 7 at 11:59 p.m. Pacific Time.

We apologize for any inconvenience and we thank you for the opportunity to entertain you.

Sincerely,
The Redbox Instant by Verizon Team

The Verizon-Outerwall J.V. launched the service in March 2013, offering a service that was viewed as a potential rival to Netflix, a service that now counts more than 50 million subscribers worldwide. The Redbox Instant by Verizon service provides subscribers with access to a streaming library, plus the option to obtain credits toward DVD/Blu-ray discs that are available at Redbox kiosks. Customers can also rent or buy titles electronically from a separate library, with rentals starting at $3 for 48 hours, and purchases starting at $9.

Redbox Instant by Verizon has not disclosed subscriber figures, but the totals clearly weren’t nearly enough.

“The service is shutting down because it was not as successful as we hoped it would be. We apologize for any inconvenience and we thank you for giving us the opportunity to entertain you,” reads the FAQ about the decision to shut down the service.

The FAQ adds that the service will be providing a full month’s subscription fee refund to customers who paid for, but only received a partial month of service, and that refunds will be automatically applied to payment card accounts no later than October 24. Customers must also use disc rental credits included with their subscriptions by Tuesday, Oct. 7.

Redbox Instant by Verizon said it is “exploring options” for customers who purchased electronic versions of movies that are currently being stored in digital lockers.

Redbox Instant by Verizon has developed apps for a range of platforms, including PC browsers, iOS and Android-powered smartphones and tablets, the Xbox One and Xbox 360, PS3 and PS4, Roku, Chromecast, Fan TV, Samsung smart TVs and Blu-ray players, LG smart TVs, Kindle Fire  tablets, and Windows Phone 8.

A statement from a Redbox Instant by Verizon spokesman about the decision issued Saturday largely echoed the public posting: “The joint management of Redbox Instant by Verizon has elected to cease operation of the service effective Tuesday, October 7, 2014.  The joint venture partners made this decision after careful consideration  The service had not been as successful as either partner hoped it would be.  We apologize for any inconvenience this may cause our customers.”

It was not immediately known how many employees tied to the service would be affected by the decision. “While Human Resources matters are private, I can tell you that the Redbox Instant by Verizon team is made up of talented individuals who made great contributions to the service,” the spokesman added.

The coming shutdown of Redbox Instant by Verizon enters view as Comcast shifts the distribution and sales strategy for its own SVOD offering, Streampix. Comcast confirmed in late September that it had halted sales of Streampix to broadband-only customers and that is was decommissioning its Streampix apps and Web site. However, the Streampix service will continue to be sold as an a la carte option (for $4.99 per month), or given away as a perk, to customers who take certain bundled service packages.

Meanwhile, Canadian operators Rogers Communications and Shaw Communications, are set to launch their multiscreen streaming service, “shomi” in beta form later this month.