Shomi the Monopoly: The New American Gatekeepers?

Shomi the Monopoly: The New American Gatekeeper?

By Dan Speerin

(Note: These are some quick initial thoughts on the Shomi shut down from myself and the communications team - expect more from our IWCC board in the coming weeks as we discuss #digicancon)

And with that tweet, Roger's attempt to jump into Netflix invested waters vanishes underneath the wave. The prospect of a Canadian rival creating a competitive marketplace in Canada against content behemoth Netflix is now looking very unlikely.

So who killed Shomi?

Corus –  When Corus bought Shaw Communications for 2.65 billion dollars in couch change, they didn’t buy Shaw’s 50 percent stake in Shomi.

Shaw: Leaving Rogers with a Shomi partner who had no tv stations to run said content on and wasn’t much interested in keeping Shomi on life support didn't help things.

Rogers – With their partner gone from the mix, many thought Rogers might simply eat that cost and use Shomi as a platform to launch original content and use their other media properties to double down on the service. In 2016 without original content, you’re basically running a worse, yet legal version of Pirate Bay at a Netflix price. Even Crave TV (Bell’s equivalent) recently turned web series Letterkenny into a hit Crave TV series and soon Russell Peter’s will have a mini series airing on the platform as well. Sadly for creators, Rogers didn’t feel that route was worthwhile. Canadian media critic and twitter cynic Jesse Brown summed up Rogers move today in this way.

Amazon Prime “Canada” – Some of the most popular content on Shomi came from Amazon Prime, who according to many insiders and media pundits are basically all packed and ready to invade Netflix "Canada" territory. Some thought Amazon would be the natural fit to take Shaw’s stake in Shomi and save the day, but now it appears we may be getting a new American platform with another maple flavoured “Canada”.

Netflix – Netflix has Hollywood freaking out as it is getting very close to joining the Silicon Valley Mount Rushmore of Google, Amazon, Facebook and Apple in the “too big to fail” department.

Much will be made about badly Shomi was "losing to Netflix" when it came to Canadian subscribers, a study released in the summer by Toronto's Solutions Research Group (SRG) show that even if they combined forces, Crave TV and Shomi only had one-seventh of the number of subscribers that Netflix has in Canada.

That number however was found by an online survey of 1000 Canadians and the truth is, nobody has the complete data. The number that means more to Rogers today is probably their loss on investment of approximately $100 million to $140 million in its third quarter.

The number that should mean more to creators is simply this – 6 billion.

Why? Because, in the bigger picture everyone is losing to Netflix. Netflix is roughly eight times bigger than its closest competitor when it comes to paid subscribers. The closest company behind them is Hulu with about 10 million paid subs.  Meanwhile Netflix is spending $6 billion a year on content.  

Here’s what the FX Network’s Chief said earlier in 2016

"I think it would be bad for storytellers in general if one company was able to seize a 40, 50, 60 percent share in storytelling,"

The idea here is the Wal-Mart-ization of content, knock out the competition and all of a sudden the deals aren’t so sweet and creator friendly. The years spent in Canada worry about media consolidation are ironically now the problem of those who benefitted from it.

It's hard to know anything about Netflix, because like the other members of FANG, they take a Wizard of Oz approach to their company. Don't peak behind the curtain. The Hollywood Reporter did their best this month to get some quotes for a piece they did entitled The Netflix Backlash: Why Hollywood Fears a Content Monopoly. Not suprisingly, they didn't have too much luck finding anyone to speakout agasint a company spending 6 billion on content.  Which was explained succinctly with the following quote

Retired NFL player Trevor Pryce, who sold the animated series Kulipari: An Army of Frogs to Netflix, jokingly references Fight Club — “The first rule of Netflix: You do not talk about Netflix” — in an interview that soon will air on my KCRW show, The Business.

As #digicancon conversations obsess over the “changing” industry, a conversation about consolidated power held by large corporations will be had. But unlike chats of old, we now have to ask which companies?

There's an idea around #digicancon that creators are more free than ever because of online possibilities, but usually that's spoken by those who haven't lived online as a creator.

Canadians tend to think of our consolidation problem in a pre-digital framework with Bell and Rogers owning a large piece of the pie. But we often forget in the digital age that companies are thinking global domination. Facebook, Amazon, and Google all have basic monopolies on what they do.  Even public transportation is up for debate as Uber grows beyond it’s American borders.  In a world where scaling against giants can feel next to impossible, what does that do for Canadian creators looking to sell their content or their Canadian stories?

Netflix may have the answer, but they probably won’t tell you.   

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