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Netflix, Hulu, CraveTV, Spotify, Apple Music, Shomi and other on-demand service subscriptions are rising quickly. Consumers want to find the content they want on their schedule, but is this the real future of content distribution? This panel discussion features the pros and cons of streaming services and subscription based programming and what the future may hold.
Debate about SVOD and OTT best practices, and streaming pros and cons, has generated a lot of questions. What will the future of streaming based services look like? Is SVOD here to stay? It’s clear that TV consumers want the content they want on their own schedule. This has been demonstrated by the rapid rise of subscription services like Netflix and SHOMI. But are SVOD and OTT the ultimate solutions for video content distribution? This panel of industry experts explains factors behind the rise of SVOD, and how to ensure OTT best practices. They also look at newer trends: what about social media as new video distribution platforms? Will there be different platforms entirely in five years down the road? What about a new aggregator to improve discoverability? The panel discusses whether there will always be a free, ad-supported model for TV, and how branded entertainment comes into the picture.
Editor and publisher, Cartt.ca, FindTV
Executive Director and Research Associate, MIT Communications Futures Program
Senior Vice President and General Manager, Shomi
“My particular focus in this very large group, has been on the future of television and video…Video [is] an incredibly rich and dynamic space, and things keep changing all the time.”
“[When] the traditional players move onto these platforms, they realize that they have to change their content to suit the unique properties of that platform…Their show [on] Facebook is different than [the show] they created for YouTube, because they recognize that Facebook is different from YouTube.”
“Consumers clearly want to find content that they want, on their schedule but…SVOD, OTT, is this the ultimate destination for content distribution?”
“People will watch content in a lot of different ways. They’ll watch them on linear broadcast shows. They’ll watch them in a subscription basis. Sometimes they’ll pay to watch individual shows as well… People subscribe to services like SHOMI and Netflix. People still watch linear TV and the advertising market is there and proves that…I think all of these platforms will be around, and I think there will be more. If we look five years down the road, there will be platforms that we aren’t even thinking about [now].”
“Most of the studies say that piracy is driven primarily by a lack of access, as opposed to someone really wanting it for free.”
“The best way to combat piracy [is] offering customers something that is of value.”
“The process of discovering content is the experience.”
“There’s a lot more choice. To me that’s good for customers, or subscribers, or viewers, because if you provide people with a lot more things to watch and a lot more choices, inevitably, I think that’s a good thing…For distributors, having more content [is] clearly a good thing…[For producers] now [in a] pretty inexpensive way, you can produce high-quality content, and the more distributors you have, the more they let you create the content you want, [so] that’s a good thing for producers.”
“We have a lot of typical promotional mechanisms on our site. Whether [it’s] something featured in our carousel, [in] a collection like our Super Series sampler, or 10 movies you probably didn’t see but should. Those are certainly ways that we can bubble content up for subscribers…But it’s all about our content.”
Greg: We are going to get going on this next session. Welcome to the panel on the Subscription Based Programming: Here to Stay or Gone Tomorrow? Thanks very much for the organizers for inviting e to speak at this. I appreciate it. I am your moderator panelist, Greg O’Brien, I’m editor and publisher with Cartt, with two Ts, dot ca. On my far left is Natalie Klym, I said it right, correct?
Greg: Executive Director and Research Associate at MIT, at the MIT Communications Futures Program, and then David Asch, Senior Vice President and General Manager of SHOMI which I think everyone is familiar with in Canada. Before we dive into the topic at hand, we are just going to introduce ourselves a little bit. I’ve been a journalist for over 25 years. The last 19 of which, believe or not, I’ve been covering this industry specifically. Cartt stands for Cable, Radio, Television Telecomm, so I have a lot more facts about this industry swimming along in my head than I ever thought possible. And we have a room that is very unlike CRTC hearings. It actually has windows and we can see the sky which I love. And now, cartt.ca, this year, we’ve launched, a soft launch so far, something called FindTV which is a way for customer service reps when they feel calls or e-mails, or whatever, from customers. To be able to tie the show back to the channel for them. Something really fast, works really well for them, where if somebody calls in and they’re not familiar with the packaging, not familiar with the channels but they know what shows their family watches, they’ll be able to tell the shows to the customer service rep who will be able to tell them what package they need to purchase. Simple little tool but we hope it helps the industry first. So that’s me and I’m going to turn it over to Natalie next to give a brief introduction of herself.
Natalie: I work for a program at MIT called the Communications Futures program. It’s a joint program between the Media Lab, The Sloan School of Management and the Computer Science and Artificial Intelligence Lab. We are an industry sponsored program. So, basically, our unique characteristics… are that we are looking at the evolution of communications from a very multidisciplinary perspective. So we’re not just looking at technology or economics, we’re actually looking at all of those different dimensions together. So, it’s a very multidisciplinary team of people on the MIT side and then we’re sponsored by actual companies from the private sector who we treat as our collaborators. So we have people… Most of them are network engineers, there’s certain executives as well… And so together we are trying to… Trying to figure out where this is all going with some intention to maybe try to influence or shape things to go one direction or the other which is very difficult given all the various competing and conflicting interests going on in all the different pieces of the industry. My particular focus in this very large group, has been on the future of television and video. It is really coming from the perspective of… What I’m sure you’ve all heard about in terms of industry disruption, where the traditional paid TV providers are feeling like they’re being disrupted by this online video industry. So that’s where I’m coming from and we’ve been looking at the online video space from about 2005. Before that, we were looking at other services that have traditionally been provided by Telecomm operators and as they’ve been, one by one, been disrupted by online services whether it’s voice or music which was not a Telecomm product but another industry’s product and then we moved onto video and we’ve kind of stayed there because unlike some of the other services that we looked at, it’s an incredibly rich and dynamic space and things keep changing all the time. My role as an academic is to try to make sense of this constant stream of announcements and trends and try to create some frameworks that make it a little bit easier to understand where all these… What the significance of all these little things that are happening are and you know so to ground some of the things into some of the theories coming out of the business school, looking at some of the experiments that are coming out of the media lab and looking at the regulatory aspects of it. So all these things, lots of activity is going on and in different directions but again, my focus is on video. That’s what I do and I’m actually here as much to learn from everybody as you are to learn from me because I am an academic and so I really like to find out from the people who are actually out there on the front lines doing this thing, I need to hear from you.
Greg: David, let’s hear your intro.
David: Thanks for joining everybody. I’m David Asch. I run SHOMI and I’m sure the organizers of the summit here knew this but tomorrow will be my 14th month anniversary on the job at Shomi and I thank them for doing this with very good timing for me. But I have been in the content business for quite a while. It’s what I love to do. One of my very first jobs was at a movie theatre, and I’ll date myself a little bit but this is pre-Cineplex, Megahouse era, little two house movie theatre in the town I grew up in – one of my first jobs. But from there, many of the things I have done professionally have been around content. I worked for a phone company in the content space. I worked for a company called Redbox in the content space and now I’m at SHOMI. I’m not going to steal any of Greg’s thunder but I’m very bullish on subscription on demand market and thanks for letting me be here…
Greg: I’m quite bullish as well on the market too. And in the spirit of what Natalie said earlier about learning from the rest of you, I don’t want to wait until the end to wait for questions, so if you have questions, put your hand up, there’s a mic over there. Feel free to just put your hand up and get my attention and I’ll turn to you right away. So don’t be shy. So the session description says Netflix, Hulu, SHOMI, Crave TV, Spotify, Apple Music, and a bunch of on-demand subscription services are rising quickly. It’s quite dizzying to keep track of, as we all know, there’s new announcements constantly. Consumers clearly want to find content that they want, on their schedule but is this… SVOD, OTT, is this the ultimate destination for content distribution? So we are going to look at the pros and cons of all of that as the discussion continues but before I get into that I wanted to take a bit of a step back because… I was reading a bit of some papers that Natalie had circulated to us… Where she really discussed… How people get hung up with the definition of TV because it means so many different things and you can’t go very long in this industry without reading something that says “TV is dead” which is a really shallow stupid misleading statement. There are certain things about TV that’s changing but to say TV is dead is just ridiculous. So I just wanted to start off with a definition of TV how you see it changing and Natalie if you could take us a bit into your research on that and how people get so hung up on that.
Natalie: Sure. The gentleman from Ryerson gave a really good talk yesterday. I don’t know if you guys heard it on the history of television and he kind of stole my thunder a little bit. He used one of the slides that I tend to use which is breaking down the word television into “tele” and “vision. If you break it down that way, you’re basically talking about the delivery of any kind of visual media over telecommunications network. The model that we ended up with in the 1950s, or late 40s, early 50s, is one of any number of possible models that were in inventors’ minds and in the labs before it reached that point. So if you go back to the really pre-industrial version of all these different combinations of just taking visual images and somehow throwing them over telecommunications networks, you come up with all kinds of services and it actually looks a lot… What we see today looks a lot like what we saw way back when, whether they were actual experiments or just imaginations being based on what people thought would be possible someday. So we have this very very multi-faceted landscape right now of all kinds of things that you could consider television if you look at it in this broader sense of the word. And, you mentioned the difficulties that I’ve had. I’ve had some very tensed discussions with networks engineers and people who have been putting their heart and soul into making it technically possible to get HBO online so you could watch Game of Thrones without a paid TV subscription. And so when I stand up there and say if you start talking to the YouTube universe and the Snapchat people and the Instagram people, there are some of the quotes I threw up on the screen “Who cares if you can get HBO online? When you want it? HBO on the moon? Who really cares? Who cares about HBO? Who cares about TV shows? Who cares about a 30 minute, 60 minute program?” We’re creating platforms so you can stream live whatever you want. YouTube videos are like 5 second, 5 minute productions like we just saw in the session that was in here before this one. You know, people in their kitchens, in their living room, making things… That’s all part of this landscape. So you’re very narrowly focused on making the old thing just get kind moved onto a different delivery network. And That’s not what disruption is about. That’s one dimension of disruption but if you dig down deep into the disruption theory, Clay Christensen who I know has been trashed a lot lately, he’s a big name in my world, there are still a lot of a valuable things in his work, and one of the most interesting things to me has always been that when you change the technology, and this is where Christensen and Marshall McLuan really should have sat down and had tea together one day, you don’t just change… The product is going to change when you change the technology. So everything that we are seeing right now is still completely new, it’s completely experimental. We don’t know if any of this stuff is going to be around in 5 years. Whether it’s because the business model isn’t going to work, or whether it’s because there’s no real aesthetic meaning to some of these things. They’re all just very, let’s try this out, let’s try that out and maybe something will emerge later on that will stay, or maybe it’ll just constantly change. We’re not really sure because the whole environment is different. Things change quickly. Nothing is very stable for very long. But The idea that when you’re thinking about television and online video, it’s not just about taking your traditional content or your traditional programming and finding a way to get it, technically, on the Internet. Dealing with the regulatory issues whether it’s net neutrality or program access rules. It just goes way beyond that to completely blowing apart what it means to have visual images from point A to point B over some kind of Telecomm network.
Greg: So David, is SHOMI going to be there in 5 years? You think? Will there be linear TV in 5 more years? And how do you think SHOMI has affected how Canadians think of television?
David: Yes to a lot of your questions. I’ll try and address pieces of those. But linear TV still a healthy business and for a lot of the things, we’ve discussed this before, it’s not just live sports. People will watch content in a lot of different ways. They’ll watch them on linear broadcast shows. They’ll watch them in a subscription basis. They’ll… Sometimes they’ll pay to watch individual shows as well. I think all of this adding to the options customers have and people have spoken with their wallets. People subscribes to services like SHOMI or and Netflix. People still watch linear TV and the advertising market is there and proves that. I think all of these platforms will be around and I think they’re will be more. If we look 5 years down the road, there will be platforms that we aren’t even thinking about. It doesn’t matter whether it’s over the top, or over a Cable Fibre, or a combination of both. I think we’re going to see all that but some of what you’re seeing with how people watch TV and watch they watch probably hasn’t risen yet. People… I’ll give an example. Company called Periscope. Most people have probably heard of it now. Two or three years ago had anybody heard of that? And now you’re seeing them in the news quite a bit but people are watching content there. And whereas before it might have been user generated content, you’re starting to see professionalism follow. Professionalism will follow wherever the eyeballs are and that’s why I think a lot of these platforms that we will see in five years, we haven’t see them yet, or certainly haven’t become mainstream yet.
Greg: And you see some of these platforms… Take Periscope or Facebook Live, they’re trying it looks like TV broadcasting to me. You know, you take the Hulu Skinny Bundle that they’ve launched, or are launching and that looks like cable TV to me. It looks like we’re kind of disrupting the traditional companies and kind of reforming what we’ve already made with what already exists but delivering it over IP instead. Is that fair?
Natalie: Well, I think… If you look at Netflix, Amazon Prime and Hulu, the big three and similar services, I think, yeah, we are just recreating the same model. But if you look at Instagram and Twitter… I mean Twitter’s live deal with NFL that’s just going to be same old programming through a different platform. But what’s happening is the more… Especially the traditional players move onto these platforms, they realize that they have to change their content to suit the unique properties of that platform. Again, they still don’t really know what that means. One example… “The Young Turks” I don’t know if anyone watches “The Young Turks” in this room. They created content for YouTube but then they created a show specifically for Facebook and their content… Their show from Facebook is different than what they created for YouTube because they recognize that Facebook is different from YouTube, even though it’ still short form, and it is still not traditional programming but there’s these finer sort of categories and that’s one of the things that I do, you try to create taxonomies. You start with this big pile of stuff and someone says “Okay, sort that out. Tell me what does that mean?” So you start to look at it all and go, okay, that’s common, what are some dimensions here, you do your 2×2 and try to figure out what’s the difference between this and that? And you know, the big slice is, okay you’ve got the Netflix and HBOs, and I call that those more conventional entrance but then you’ve got… What is, for the most part if not exclusively, social media. Social media platforms are these new distribution platforms so they aren’t just complimentary components to the experience like Twitter being the back channel to Live TV programming. Twitter as back channel and Twitter as distribution platforms those are two very different things. But social networks, social media as new video distribution platforms is still new and how that’s going to change the nature of the programming is what I’m most interested in right now and will users taste change? You mentioned professionalism will follow. So professionalism is one dimension is one aspect of it. Maybe it won’t follow, I don’t know. Again, the people that were on the panel before me were talking about… And some of the research I’ve done has talked about this desire for unprofessional content because it’s unprofessional, because it has certain characteristics that you lose when professional comes in. Last year, there was a YouTube conference where a lot of these original YouTube creators were really lamenting the fact that their industry was being infiltrated by money. Everyone wants money. Also the money is coming in… I call it the gentrification of YouTube because whatever made it what it was is now going to be lost because of money. So, again, what are… How are users’ tastes going to change? On the one hand, we do want this high production value… There’s the whole series movement which is now really becoming fantastic because as far as I’m concerned… I don’t like watching all the YouTube stuff myself but I’m from another generation. And that’s all very high production cost stuff. It’s very different cost revenue model than this other stuff you’re seeing on social media. But where it’s going to go? We don’t know. Maybe, professional, maybe it won’t. Maybe we’ll have two sets of media products. Maybe there’ll be two different markets. Maybe one will replace the other. It’s hard to tell right now.
Greg: David, can you envision a day where SHOMI is incorporating Twitter, or Instagram, YouTube, or whatever, into its system and sending out its content rather than a marketing tool which is how I think primarily use those channels now?
David: Yeah, so… in Instagram, we’re not on Instagram. But we use a lot of these platforms for promotion. To some degree for distribution which is something we’ve gotten into so I do envision a day where we use it a bit more so. I’ll give an example. We had a show called the “Enfield Haunting” which was a mini-series, three episode mini-series, that we aired around Halloween of all things, last year. And we actually premiered the first episode on Facebook. Great avenue for promotion. One of the things I found when you talk of discoverability, there’s a lot of good content out there whether it’s user generated, whether it be professionally produced, or everything in between. And it’s imperative that you stand out somehow, and if we could actually take the first episode of “Enfield Haunting” and make it widely available, we felt that it would get people to watch it even more. So that’s where we’re blending in a little bit as opposed to just purely promoting, we’re actually distributing that on our Facebook page and we had over a million and a half people watch it. So for us that was a big success and that’s an example of how we’re actually using it for something beyond straight promotion but actually have it be an avenue for our content. Will it happen widely? I think it will take time for that but I’m just speaking for my own experience here.
Greg: Are you able to follow the money though? Where you premiere that on Facebook, can you tie that back into how can this increase subscriptions for us?
David: One thing to clarify. We are only about subscription. We don’t do advertising. Facebook will do advertising and I have nothing to do with that piece of it. But for us, the more people we can engage to our platform, to try, as long as they come in for our free trial or they pay for subscriptions, we can generally follow that. One of the things… We don’t use traditional measures of viewership. It’s all about… Do subscribers, do they come in? And do they engage with our service? Do they pay us and engage with our service? And so we had success with that. Again, I’m not really at liberty to share numbers but we’re very happy with that kind of venue and I think we would do more of that.
Greg: Natalie, you mentioned that.. Oh, we’ve got questions. Let’s do that first. Peter, I saw your hand first. So you can go first.
Peter: Thanks, Greg. Peter Miller. I’m a lawyer in Toronto. One of my favourite sayings in looking to the future is a William Gibson saying. He was the author of Neuromancer… And he was saying that “the future is all around us. It’s just unevenly distributed.” And what I think that says about this thing is that when we look at trends, first of all, we see that television content isn’t fundamentally changing. It’s not likely to fundamentally change in the next 5 to 10 years. The feature film forum has been around for fifty years. A very success format, dramatic form, 30 minute, hour, or make it slightly longer, binge view, etc. We’re evolving it but we’re not fundamentally changing it. YouTube is having an impact on information programming because rather than watching a whole cooking show, you go out and find the vignette, or whatever. So that’s where it’s really changing but fundamentally, I don’t think in the next 5 to 10 years, television the form is going to change. What I find interesting about this question is I think the real question is the crawler (unintelligible 00:22:04) because I think subscription is definitely here to stay. The question is, is ad supported television here to stay? To me that’s the real question because again, when you look at that, you see a bunch of trends that say maybe not. Certainly in Canada, I don’t know if it’s true in the US, but advertising has a percentage of GDP is going down, if you look at trend lines. We know part of that is because of a move towards content that is branded and more marketing efforts are more successful when people ad skip. Any consumer of SHOMI, Crave, or Netflix gets used to watching television without ads. It’s really hard to go back. Is it fair to ask that question? What do you think is the future of advertising in supported television?
Greg: My own opinions… I’ve been covering this industry for a quite while… My own opinions with ad supported TV… I mean, I kind of like linear TV… I like the rhythms of it but the problem is when the commercial comes up, my phone comes out. That’s my rhythm when I happen to watch linear TV so how many of the ads do I see? I don’t know. It’s hard to tell but I’ve been repeating this story a little bit because I talked to an independent cable operator but I won’t say his name because I don’t want to get him in trouble. He sort of found his business is better with broadband and he sees that as his future. All of the different channels that he offers as well to all of his customers which he knows he needs to offer for the next couple of while, he finds to be a bit of a pain in the rear end. I’m looking at the Corus guys right in front of me so they’re probably wondering who this distributor is. And his idea was that maybe in the future we take the Skinny Basic idea that just launched and turn it sort of towards linear TV in general and start to think of linear TV as the way long distance has developed. Whereas it used to be something people would pay for by the minute, big money, and now it’s kind of just a toss in, unlimited long distance, numbers, you know, for 3 bucks or free. So maybe linear TV is something you buy a broadband subscription from a carrier and then for an extra 10 bucks, you get 50 or 100 channels of linear TV that just run constantly with the ads like they always have. Because there is still value there for some people. But people buy the broadband subscription (unintelligible 00:24:30) of anytime, anywhere viewing. That’s just my opinion informed by a carrier I just recently talked to.
David: I agree with what Greg said. I’ll add two other points to that to your question, Peter. Free is a good model for a lot of folks. I think as long as there is a free model which advertising supports that there will be an audience for it and people love to watch things for free. I think SHOMI is a great bargain at 8.99 a month but I can’t beat free. And I think that as long as people want to watch things for free, you’ll have an advertising base model. I think to a lot of what Greg said, it will change a bit but I certainly think it will be around. Another thing is a lot of the things you see on live, are better watched live. I think about what are great things to watch on live TV, sports, the Oscars, the Olympics soon to be, and those are always going to have an audience that are supported by advertising but also when there’s a result, when there’s an event, the conclusion, people will often want to see that live. And I think as long as you have live TV, there will still be destinations that will yield an ad based model.
Natalie: I don’t know if this will be a satisfying response but what I tend to do when people ask questions is I start breaking down the assumptions in the question and then I ask alternative questions. So, I question the question. I would question both what do you mean by advertising and what do you mean by television? From the advertisers’ perspective, they’re looking to the Internet for… Where are they going to spend their money? And online video again, is a very complicated space. If you just look at the ad supported models like Hulu or YouTube, you’re going to get one picture but then bring in Facebook, and the more… Facebook is this thing that hasn’t been considered part of the television landscape but it really is becoming part of the television landscape. And from the advertiser’s perspective as well they’re looking at search, and everything else in that whole big space of where they’re going to ship their spend, their ad spend. So that’s… I know that’s not a very good answer to your question. The other thing that I’ve been looking at which I think you mentioned is the trend towards branded content and that’s an old model that’s coming back again and it’s coming back in new ways, and there’s more and more money going towards branded entertainment and some of it is actually pretty good, it’s pretty interesting, there are certain things that I’ve seen that I didn’t realize was branded content. Some of it is obviously branded content but I don’t know if anyone’ seen the movie or even just watched the trailer which is what I do with films now mostly is I just watch the trailers and I’m done. Werner Herzog’s new film on the Internet, it’s called “Lo and Behold.” I watched the trailers and it looked really amazing. And it would totally fit in to the kind of questions that we deal with, my group at MIT, about… It’s more of the parallel (unintelligible 00:27:46) of the Internet. What are the implications of everything being connected? And there’ small these security issues and it looked really great. And he’s a great filmmaker. And the more I research the film for completely different reasons, eventually I found out that it’s actually a piece of branded content, it’s completely funded by a B to B security company like Internet security company, data security company, it’s called Metscout, I think, and they had hired an advertising agency to do all their branded and they said hey, let’s just make a big movie. We want Herzog to do it because he’ sheen doing all the movies for the cellphone companies on texting and driving. When you see that change, it’s a problematic area, the whole branded entertainment thing, but it has some potential to impact the advertising dollars somehow from not completely disappearing but addresses ad-blocking, and all the anti-advertising issues that you raised.
Greg: When you mentioned “The Young Turks” in our conference call, I went and watched some of their stuff and I saw one of their sort of different business models as well. Where they ask their viewers online to use a special URL when they shop on Amazon. So you type this special URL into your browser and shop on Amazon, and if you use that as you’re shopping, so if you buy a blender, a book, snow tires, whatever through this URL, “The Young Turks” get a piece of that action. They didn’t say how much. I don’t know how much they make and they said… But the also interestingly to me, a journalist said, this is a way to help keep us independent and I immediately think “Well Not if you’re going to report on Amazon or electronic retailing” but that’s something else. It speaks to the different business models that people are experimenting with right now. Raj, you are next.
Raj: Thank you. Hi everyone, I’m Raj. I’m based in Toronto. I had a question about the long term viability of subscription based services those with a monthly subscription model? In particular, I’m thinking of Netflix, and SHOMI, and Crave. So these are services that essentially sub-license content created by others, either traditional system or movie studios, and then offer them to subscribers for a monthly fee. But in a sense that makes them vulnerable as well. In a sense that, eventually those rights for that programming is going to come up for re-negotiation, the value associated with those rights is going to change, they may end up having to pay more which in turn may result in higher fees that have to be passed along to their consumers or some other way. Now, Netflix recognized that potential dilemma going forward but it was able to offset that risk by virtue that it operates in 130 countries, its revenue base is considerably larger, and it started making its own original content years ago and it has dramatic plans to continue to create a large amount of content which can differentiate itself through its offering and of course, resell that content as well. But long term… I guess it’s a question specifically for you David with SHOMI, and I imagine the challenges are the same for Crave. Given that SHOMI and Crave only operate in Canada, and you don’t necessarily have that wide based revenue that Netflix has to differentiate the basis of your programming offering, how do you differentiate yourself? And if your answer involves perhaps taking some of the Canadian content created through some of your related companies and putting it on SHOMI, is that enough to keep your service relevant going forward in terms of keeping it viable?
David: So, a fair question. I like our content. I’m biased but I think we have great content. I don’t think about content, you know, what Netflix is doing is one thing. What Crave is doing is something else. We have our own content strategy and a lot of it revolves around taking really highly produced and highly watched content and making that available on a subscription basis. I actually like that model. We’ve shown that it works. We have a lot of viewership. We do some different things as well. For instance, everyone has heard the term, binge watching. Some of our series, we will offer in a binge basis. Others, we will do, day to day. So if you want to watch a show like “Jane the Virgin,” you want to watch a show like “Empire,” you get that 24 hours after the linear broadcast. I think it’s not just about the actual content but how we actually program it, how we schedule it, those matter. So a show like “Empire,” a show like “Jane the Virgin,” will be in our top 10 series, top 15 series on a week in, week out basis. And a lot of that I attribute to the fact that you get a lot of promotion, and people want to watch things in a day to day basis, as well as binge watching. So to answer your question, I do believe that we will be competitive in licensing and yes, we compete against Netflix and Crave for some of that content but we work with the same content suppliers that they all do, and we have good relationships with them, and a lot of the content, 70% of the non-family content that we have is exclusive to us. So you have to come to SHOMI to watch it, and that will continue to deliver viewers and how we schedule it.
Greg: Any other questions? Or did you want to chime in on that?
Natalie: No, no.
Greg: If you want to wait, the microphone is coming around. I know they’re recording but some of this is live stream.
Question: It’s a two parter. First one is name the company you were referring to, the independent distributor.
Greg: It was over a beer.
Question: Just kidding. It has to do with… It’s kind of an extension of what you were saying. How they wanted to get out of the content business and how that might work for them but then you look at larger companies whether that’s Shaw or Rogers, and Bell, and they make a lot of money in that space and you know, I don’t think they would have that luxury to just say “This is too difficult. We’re going to back out.” So, if anything, whether it’s with free range, or everything else, they seem to be wanting to become, a content curator, aggregator, in that OTT space, similar to what Crave and SHOMI are doing, and Netflix, and I guess what I’m going to ask the panel here is, five years from now… What do you think the make-up will be in terms of these traditional companies playing in that space versus the SHOMIs, Craves, in that space, and how that might.. How it’ll all fit together?
Natalie: So, are you talking about the traditional pay TV…
Question: I’m talking about traditional, long form, content and where it lives, and who’s… It’s based on the assumption that people don’t want to go to a million different places to access content. There’s going to be a bunch of companies fighting over being the place to go and search and find content… So how does that play out?
Natalie: I think one of the places where I’m looking at is… You know, a company like Apple is going to step in and be the aggregation point where it was at one point traditionally with the pay TV model, it was the network operator that was the aggregator. But, you know, their bundle is starting to fall apart and these individual networks or channels, whatever you want to call them, are going online and operating on their own which causes a lot of problems for consumers who are now… They used to be able to just go to one place and not just for searching but bundle pricing and everything else. So, if it’s separating at the point of the actual network, where you going to see this reaggregation? And I think it’s going to come from somewhere, you know, downstream. It’s going to be someone like Apple. It’s going to be the new aggregator and how all that’s going to shake out, I’m not sure. I think there’s a lot of inefficiencies in the system right now in terms of how content is being aggregated and it’s all mixed up because some of these companies like Netflix, they actually function like traditional programmers. They function like an HBO on the one hand, but they also function like multi-channel, you call them BDUs in Canada, in the States, MVPDs, multi-channel video distributor program, programming distributors. So they’re doing both of that at one place but again, overtime, these inefficiencies are going… Things are going to reform somewhere, somehow, and it could very well be a whole new player in the value chain that has never performed that function before.
Greg: It’s not a very good customer service experience when you know, you’re looking for content online and you know, is it in Netflix, is it in Crave, is it in SHOMI? In and out, in and out, looking for… And you’re paying $10, $8, $10, whatever it is, for each of these different services, where in the past, it was all in one place. And say what you will about the usability of the cable box, at least, you could search for all the content that’s there in one place. It’s kind of clunky and whatever but you could search for it. The more I think about it, unless there’s an aggregator like this, we could be looking in 10 years in saying “Well, I’m paying $10 for Major League Baseball, and NBA, and Netflix, and SHOMI, and Crave, and this, and this, and this,” then you’re quickly pass what you’re paying for cable right now. Maybe in ten years, we’ll be saying “Remember the good old days, when we were only paying $70, $80 a month for one place, for all of the content?”
Natalie: Another interesting trend, I mean, in Canada, there aren’t as many services as there are in the States right now and so consumers will do whatever it takes to get… To pay the least. So a lot… You have all these different SVODs, and I did this for a while and then it just became too much of a pain to keep managing this but you basically just subscribe to one service for a day, or however long it takes you to binge view… You know “Girls” came on, you waited… They don’t do their full release and so you wait until the season is over, they’re all available. You do the free month trial of HBO, you watch everything you want in like two days and then you go “OH sorry, no, I didn’t really want it.” Or maybe you’ll pay $15 for that month and then you quit because there’s no commitment. What’s happening in some cases, this is probably on a very small scale, the SVOD services are being used by consumers like TVOD services, transactional services, so rather than paying for a full series of “Girls” or whatever through iTunes, and paying however much that costs which is a lot more than $15 or free for a one month trial… All that revenue is being lost because people are just subscribing here for a month then they’ll subscribe here for a month and they just kind of circulate and then, they’ll pay a lot less for consuming that content. But that’s not an efficient way for consumers to do that either but it just shows you that things are not set up properly right now but they will eventually, market forces, whatever a little bit of regulation, will somehow make things rearrange themselves. They will get rearranged but when, how and where exactly…
Greg: This is the point where the journalist in me wants to know what your true numbers are. In terms of customers coming in and out. I’m pretty sure you’re not going to tell us.
David: I’ll comment still. It’s an interesting discussion but to Drew’s point… One of the things in free range, a pretty great example, I think, whether it be at Shaw or Rogers, and they’re very competitive and one of the things you think about… I have a cable subscription… I have a triple play yes, my internet, my phone, my cable, but the best part about cable for me, and this is me personally, it’s a great way to organize all my content. And what I think you’re seeing with free range is you’re now taking that subscription and enabling people to take it on the road with them, to take it wherever they want, and so that’s why I think, absolutely, Shaw and Rogers, are going to be competitive in that space, and other BDUs for that matter. But I think that’s one way they’re going to compete with this. I think it is in some cases, you might say “Well there’s so many services here” and one of the things that I’m challenged with, it’s my responsibility every day that for 8.99, I need to provide a lot of value. So, I may have thousands of programs but I need to make sure there are things on there that people want to watch and if it’ son my service that people need to know it’s on there so whether it be an “Empire,” a “Jane the Virgin.” I can go down the list. It’s imperative that I tell people that it’s on my service. One of the other benefits I have is my service can be carried by other people… MVPD/BDUs depending on the market you’re in. I’m in a Rogers market and I have channel 300, my SHOMI is there, and I can access it just like another channel so I can actually get my SHOMI subscription on Rogers. I can also get it on Shaw if I’m there and that again, adds value to the customer where they can find something very easily on the cable dial in a way that is very tried and true, and we get a lot of viewership of SHOMI on the traditional set box. People often will say “Oh, it’s going away.” It’s actually not. A lot of people know it. It’s a very intuitive experience. People know how to use a remote control and they can find their content.
David: I have a TVO at home and it would be perfect if Crave and SHOMI were on the box as well but it’s not. Any Cogeco people in the room, get on it. We have a question right here and another over here.
Question: Thank you Greg, David, and Natalie. All your comments in the last minute bleed up to mine but by the way, just to what Greg just said, in Brazil, rather than Skinny Basic, they’re experimenting with all-in-one. So you just buy one price, and it’s like an Internet so of service, you get charged for your time that seems what people want more than anything else. We’re used to that. Following though from the need for aggregation and (unintelligible 00:41:45) content and the discoverability, Cartt, in Hollywood… They’re saying discoverability is problem number one and if they don’t solve it, there is no 2, 3, or 4. So it seems clear that we are going to a global online media delivery system with some kind of reaggregation. So I wanted to ask David… And Netflix has been very clear that global rights are their priority going forward. So, I wanted to get a clarification on your Facebook premiere whether that was global and also whether SHOMI is interested in acquiring global rights or going global? If whatever the answer is, why?
David: We’re only in Canada and some people would actually considerate it… Well Netflix is X number, 100 of countries but I actually consider it an advantage. I’m from… A Canadian programming service and I’m programming it for only the 37 million Canadians that can access it. So we’re geo-blocked so we’re meant for Canada only and when I go acquire content I’m only interested in the Canadians rights. So others may do, and I can’t speak to the programming strategies though they’ve written quite about it in Netflix and then some others as well… Other players are global in nature. I’m very focused on the Canadian market and when we deal with the content providers, they’re very happy about that. We’re very clear about our intentions. We’re not interested in global rights but we pay money just like any other license… We pay money for those Canadian rights and so far, that’s worked pretty well.
Greg: What about windowing though? If you buy the rights for Canada for “Empire,” do you have to buy the linear tv rights? Do you have to buy all the windows in order to get exclusive for SHOMI in Canada?
David: I focus on the specific SVOD rights. Everyone in this room probably knows what a window is. But to a regular customer, they just want to watch the show. So, something like “Empire,” that’s probably a good example because in a prior season we actually have the binge rights, the catch-up, so we might have had season one on, but now we’re actually the first window so within 24 hours of the premiere on linear, you can watch “Empire” now but I focus specifically on those SVOD rights. So when I work with whoever licenses me that content then that’s what we’re negotiating for.
Greg: Okay. We have another question right here and then we’ll come to you after.
Question: You’re talking about the evolution of an aggregator and you see that… Somehow the convenience factor that people used to relate to cable and you’re saying “well over the next 10 years we’ll see something evolve to be an aggregator.” Isn’t the aggregator today, of convenience, at least for the millennials, things like BitTorrent? They will get whatever they want in the most convenient way. So, if they can get it on Netflix, or they can get it on cable, great but if they can’t, they’re going to get it, and they’re going to get it now because this is when they want to watch it. Isn’t that the danger if we don’t evolve to a new aggregator? That those types of services, whether it’s BitTorrent or the next generation thereof, will continue to be there. Because people aren’t concerned about rights or payments, they’re concerned about convenience about being able to watch it, when they want to watch it.
Natalie: Well, most of the studies basically say that piracy is driven primarily by a lack of access as opposed to someone really wanting it for free. I don’t know how true that is. I don’t pirate stuff anymore. I used to and it was primarily… First it was the thrill of it when it first came out, it was an experiment. It was interesting but It really is because of what’s not available and actually, for a while, we were working with ESPN and they were doing a lot of research on how piracy was affecting their business. I realized the unexpected consequence of their research that it informed their programming strategy rather than being a security issue, they realized that this is giving us way more information on what we should be putting where as opposed to what we need to be doing to prevent piracy.
Greg: David, do you want to talk about how piracy affects SHOMI or encouraged the launch of SHOMI?
David: You mentioned BitTorrent, so I mentioned I can’t beat free but I won’t comment on things that are legal or not but I mean… Look it’s reality and it’s not just in the video business, it’s in a lot of businesses. We could talk about the music business. We could talk about any other type of business where people can pirate or do things for free. To me, the best way to combat that is to offer value for your money. Think about when iTunes came out at first, they offered songs for 99 cents. It was very affordable and you had a big selection. Similarly, when I think of an all you can eat model for content like SHOMI for instance, that offers… We offer 18 thousand programs and not just myself, not just SHOMI, not just Netflix, or Crave, offer a good product for money and it’s very highly produced content, it’s watched content, it’s content people know and love, and it’s for a small price every month. So, That’s in my mind, the best way to combat piracy but offering customers something that is of value. Are there other methods of doing that? Again, I won’t speak… I’m just talking about how do we address the market issue that you are talking about.
Question: Okay, so I just want to say I do really like SHOMI. Because I do like Jane the Virgin and Empire quite a bit. Big fan. But I wanted to link it to Canadian content in the discoverability of that so… So you mentioned that you are primarily focused on the Canadian market and so any specific strategies you are using with SHOMI to promote, you know, our Canadian shows? And, if so, how is that linking back to the regular cable subscriber? Is it boost anything you show on SHOMI is it boosting the ratings for our regular linear television watching for any of your Canadian shows?
David: So, thank you for the endorsement. I appreciate it. I’ll have to get your name afterwards. One of the things we’re pretty proud of is 30% of our content is Canadian, is CanCon. And that doesn’t just mean Canadian talent, it can be produced in Canada but in anyway you frame it, we have a lot of Canadian content. The one thing I would say is it’s hard for me to comment, you ask, how does this impact ratings or cable ratings, I can’t comment on that because that would depend on the broadcaster, whoever it is, but for us, we just focus on good content but we’re a Canadian service, we’re programmed by Canadians, for Canadians, so we do take pride in having 30% of our content be Canadian. To me, it’s great content. I don’t think about… “Oh we need to go do this because it’s Canadian content.” It’s just great content and that’s how we think about it. .
Greg: We don’t really know what the big dog in the room, Netflix, has in terms of Canadian content. Unless we did an audit and went through all the individual titles. The two ones that I really know of are “Trailer Park Boys” and “In Between,” I guess. If there’s any other, shout them out, I don’t really know. Degrassi, correct! I once did a search and I saw something called “Helicopter Canada” where it was something made in 196… Expo 67, and it really is just an hour of helicopter shots all around the country from 1967. You can search it on there and it’s actually an interesting watch. Just go back in time a little. Anyhow. We don’t know how much Netflix really is contributing to the industry by what they buy out of Canada because they won’t tell us. The commission tried to make them tell us but that didn’t go very well. Did anyone watch the TalkTV proceedings? The Canadian content, the promotion of Canadian content, is obviously a challenge.
David: And it’s funny, you mentioned the show “Between” and that premiered on SHOMI before it was on Netflix. Netflix took a later window to that so I could probably say we were the earlier window on that. That was a great partnership between us and Rogers as well.
Question: I was just curious about your opinion on… From me, spending most of my time in a digital space, I see things becoming more niche and more global. So it’s very interesting for you to say, we want to dominate Canadian content and do that. And so I’m just curious as to where you think these things are going to trend? Do you think they’re going to be “I can’t manage my 40 subscriptions anymore” and would SHOMI be looking more to acquire these niche markets in the long term? I was just curious of your input on it.
David: So when you say niche markets, you’re not talking about geographic markets, you’re talking about content markets?
Question: Yeah, for instance, Gaia. Gaia is all things yoga. It used to be My Yoga Online and now it’s holistic documentaries, and that sort of thing but it’s really targeted at a niche market and content.
David: So, again, I can only speak to SHOMI but you raise an interesting point. One of the things we focus on, we’re a general entertainment service. So the easy way to answer your question is we have genres like comedy, or drama, we have indie. And so we do that, so my goal in having a lot of assets is having something for everyone to watch. The key to discoverability is making sure they know it’s there and directing them once they… They came to SHOMI to watch something, making sure they find whatever that is they want to watch. You’re asking a broader question which is “how will it evolve?” How the market will evolve? I can look to our neighbours in the south and say, you’re seeing their proliferation of these smaller services that are lower in price and tend to focus more on specific genres. We see a little of that in Canada. It hasn’t been as wide spread. It’s a smaller market. For SHOMI, specifically, we look at having a very general entertainment service but I’m also realistic that there are certain things that are going to be better served elsewhere. It’s the easy example but I’ll use it, sports. So, SHOMI is not about sports. There are other venues and they can be live. There are some OTT apps now that do sports as well but that’s not our sweet spot. So, will you see other types of products or packages that suit that specific genre? That’s an easy example to use. I think you probably will. Will it be more limited than the US? Hard to say but I think that will evolve. For us, my goal, is to be able to expand the genre but within our sweet spot. .
Greg: Do you use social media at all or using social media to develop, what you said, different genres? Where you have a SHOMI Facebook page for this genre, or Snapchat channel for a bunch of different genres? With different channels serving all that… To try to congregate all these different viewing groups into one place and try to funnel them towards the content you have on SHOMI? If they’re a horror fan, or drama, or whatever you have on there?
David: And so, I mentioned a lot of that for us is going to be show specific. So, I’ll give another example. We talked about “The Enfield Haunting” which was targeted around Halloween and a lot of… You can do seasonal milestones or landmarks or certain things on the content calendar to drive this. We premiered a show called “Mr. Robot” which was an award winning series and there… Some of the channels we used… The way we went about promoting that show… I’m not sure if people are “Mr. Robot” fans but that would be very different than the way we would market a show like “The Enfield Haunting.” So the social channels we would use would be a little bit different, the actual tone of our advertising or our promotion would be different and I think we channel that way. So it’s much more show or genre specific as opposed to doing something in a global way. But for us, that’s the way we would go about making sure the right customers, right viewers, right subscribers, see the shows that they’re going to want to watch.
Greg: I think you’ve done some work on social media, as well, on how people are self-curating all of these genres lists and finding content amongst themselves. What are the odds of that being the global search for everything?
Natalie: I haven’t actually done the research myself but I was working with a graduate student who has disappeared on me. He graduated and left and I kept asking, I need to read your thesis because his thesis was specifically on social media, basically functioning in that way in the value chains. And so if you think about all these different value chain functions in the overall industry, this idea that the recommendations, discovery… Search and discovery was the catch all phrase for that piece of it. Who’s going to provide that function and where in the value chain is it going to fit? His thesis was on social media providing that function which again is different from social media being a distribution platform and… I can’t tell you anymore than that other than he had done a lot of research on it, enough to suggest that it was an important trend and I have tried, tried again, even before I came to this conference so that I would have something meaty to say about it but unfortunately, I don’t.
Greg: Was there another question of there? I saw the microphone go that way. No? Okay. Let’s turn our discussion towards the producers for a little bit. I’ve got a bit of a convoluted question so I hope that you stay with me. A number of years ago, the grocery industry changed how they offer product to the consumer. They brought in a lot of ready-made food and they took out a lot of package products. Where they once had 15 brands of peanut butter, now they had five. So, not good for the producers, except for those 5 brands of peanut butter but what they say was while they cut their cost down in numbers of how much peanut butter they had to buy, the volume of sales actually went up because there were fewer choices. They found that there were fewer choices and there has been academic studies have been done about this as well. There are fewer choices in front of people’s eyes and that helped them make a choice and buy peanut butter. So that’s not really great for the producers of peanut butter that were kicked off the shelves but do you see… With all of this massive choice, there’s more opportunities for viewers, and potentially more opportunities for producers, is it overwhelming? Will it be overwhelming? Will there… There’s lots of choice now, what will it look like down the road?
Natalie: I’ll start. I’ll give a more abstract crazy answer and you can give him a more realistic answer. This is an interesting discussion that I had with some of the students at the media lab who were coming up with new interfaces, particularly around search and discovery. They created some very interesting hardware and software that involved some kind of a dome like thing with different ways to interact with your hands and it was all… And it incorporated all this software that would take account all the different people in the room, the family, the group of friends, who were trying to decide what they were going to watch, and by the end of it all, I said, well you’re TV experience is now the process of deciding what you’re going to watch, it’s not actually watching anything. You’ve created such an incredibly rich, and fun experience in just choosing and… I rarely end up watching anything anymore myself because I’ll spend an hour.. Netflix, oh I’ll try Hulu, nah I’ll try Amazon. Oh I’ll see what’s on HBO and then, oh there’s one here, and I’m paying for it, or maybe it’s on Netflix and after an hour and a half of that, watching the trailers and everything else, I’m tired and go to bed and I don’t watch anything but I’ve had this incredible experience. And there are a couple of example from popular culture that I drew from to try to express this to students. There’s this great scene from Hannah and her Sisters, where Max Von Sydow’s character crotchety old guy and he’s been at home watching TV while his girlfriend is out having an affair. He sits there and he’s describing his whole channel surfing experience and that was his experience. He didn’t watch anything. He watched everything. Just little bits and pieces of it. So, you know a lot of people are talking about this idea of discoverability, not using that term, but the process of discovering content is the experience. And can you build a business model around that and actually Netflix had… Or it was the Onion, which is a new satire site, made up a mock story about Netflix’ new, what was it called, $5/month browsing program where you just pay $5/month and all you did was browse. And it spoke to something very real because I think most people, myself including, that became the experience, just trying to figure out what to watch and then these media lab students actually made it into a game. That wasn’t their intention but that was my observation of it and it was backed up by lots of anecdotes that were starting to appear in the press about the state of affairs that you were spending all your time getting recommendations, watching the previews, trying to decide, and ending up not really watching a piece of content in the end.
David: I’m going to take that and I’m going to try… I think one of the things, if I look at it in terms of three audience groups, viewers, distributors like SHOMI, and the producers like the peanut butter producers, I’ll finish with that. To your point Natalie, the fact that you can now search and that’s an experience and there’s fun in that, alludes to the fact that there’s a lot more choice. To me that’s good for customers, or subscribers, or viewers because if you provide people with a lot more things to watch and a lot more choices, inevitably, I think that’s a good thing. And some people may like the experience, some people may like being referred to things. Some people may like the notion of discoverability and then diving into and watching. I think all and all, the more choices you can offer customers, the better. For distributors, having more content, clearly a good thing for me. With SHOMI, the more we can offer somebody for their 8.99 , the better and that applies across the board to my competitors as well as SHOMI but the more choices we can offer, all different ilks, all different genres, it’s a very good thing. When you talk about the producers, so, I think implicit in your question is, is this good or bad for them? So, if I were to put myself in the shoes of a producer of any kind of content, put aside if it’s high end content, if it’s user generated content, I think of a few things and this is just me speaking but I do want to say, first of all, can I sell my content? Can I monetize it? Can I make money off of that? If somebody buys that, will they let me make the kind of program I want to make and then will it get a big audience? Will people watch it? Will it serve a big audience for people to watch? So, if I’m a producer, I think the guess spot model works in a big way for those folks so you have more avenues to watch things. We provide a big audience. Netflix will provide a big audience. The more audience is curated or generated for all this content is a good thing for producers. Will people buy their content? There are more buyers in the market, that’s clearly a good thing for producers. And then the other question well if you’re a producer of content, you want to be able to produce the content that you want, now if you’re doing something in a user generated fashion, even those standards have gotten better. Before it used to be a little camera on your computer, now for pretty inexpensive way, you can produce high quality content and the more distributors you have, the more they let you create the content you want, that’s a good thing for producers. So I would vote, check on all three of those.
Greg: How do producers make sure their content bubbles up to the front page of SHOMI or gets promoted? How do you work with them to make sure that they’ve made a show in Canada, you’re working with them, you’re obviously distributing with it. How do you make sure it bubbles up so then people surf over to SHOMI and then… There it is, there’s our new stuff. How do you work with them or what do you tell producers?
David: So, when it comes to producers, whether it be a movie, or a series, we have a lot of typical promotional mechanisms on our site. Whether it be… Something featured in our carousel, is it in a collection like our Super Series sampler, or 10 movies you probably didn’t see but should… Those are certainly ways that we can bubble content up for subscribers. Some of the things I mentioned in terms of promotion on Facebook. A lot of what we do is focused on the content on our server. I’m very proud of the brand we have. We did great job of building our brand. Of having a certain look and feel. But it’s all about our content. A lot of which you’ll see, whether it be Mr. Robot, and now we’re featuring Mad Dog as a show called Playing House, or Odd Man Out just premiered much of what we feature is the content on our service. I’m also realistic in that people are going to watch, they’re going to come to my service if there’s content they want to watch. So a lot of what we do, not just on our site, but in the market place, is all about featuring, or promoting, or merchandising content.
Greg: Okay. How much time do we have left? Ten? Great. Any other questions out there right now? One right here. The mic’s going to come to you.
Question: So the question, David, about the exclusivity of content. Is it likely to be over the next years that a particular series is only going to be available on one service versus on multiple services?
David: In the spirit as Natalie said, I would ask questions to that but I’ll speak from the SHOMI angle. In Canada, much… I should say, in Canada, the shows that we have exclusively, you have to come to SHOMI to watch. So, a series like Mad Dogs, you can’t watch in this particular country, in that particular timeframe, meaning we have things called windows for subscription… Mad Dogs, you have to see it on SHOMI so I think to some degree it’s already there. Will that evolve where shows are exclusive across the board? I think you’re seeing it happen to some degree with some of our competitors already. I think it will evolve… I would say it’s already there to some degree. Will that become more pronounced? That’s a TBD. I think you’re already seeing it. So how more pronounce it can be that depends on the players there in the market and then as you see, different players along that… Call it that value chain with different windows… I think if they’re going to distribute in other windows, if some distributors will distribute in other windows, that’s for them to decide. For me, it’s a little easier because I’m focused on one country and one specific window, and it’s important that when people see that content, whether we have Mad Dogs, or Mr. Robot or Jane the Virgin, that they have to come to my service to see it.
Greg: Doesn’t it depend a little bit on the title as well? Because Empire You have it exclusively for Canada but doesn’t it leak a little bit over the boarder because you have it over on Fox as well and on off cable?
David: Sure, sure, there’s a broadcast component to that as well. But again, that’s’ where I talked about… There are some people that are going to watch it live and that’s great. To me, a lot a people are going to want to catch up on that. To me, it’s actually symbiotic relationship rather than a cannibalistic one. One of the things we found with Empire is that it’s done very well for us. But I’m happy there was a broadcast component. Not just because people could see it, how they wanted to see it, but it actually helps on the marketing and promotion so the more places where that show is promoted, then that’s going to… You’ve heard the expression, rising tide lifts all boats, I actually believe in that. And that’s why I think a lot of these services like at SHOMI are actually complimenting traditional broadcast, linear broadcast not competing with it.
Natalie: This pertains mostly to the US because that’s where my research is but the windowing system, as you know, is getting very complex, very complicating, and you’re getting more and more windows. And so, if you think of, especially, of the online distribution environment as an extension or a compliment to traditional, it’s a syndication window, or a series of syndication windows but there getting… Everyone is saying windows are shrinking, they’re sort of shrinking but at the same time, there’s more of them. And contents kind of floating around and… So the syndication market has its own set of dynamics. So online has sort of taken traditional smaller cable networks that used to be the syndication windows for the larger networks are losing that business to online video. At the same time, there’s more smaller cable networks coming in and competing online. There’s all these sub sub sub dynamics the more you carve out that space. Basically, anytime, you can re-distribute your content it’s a new exclusive window because it’s exclusive to that window and so you just get more windows. So it’s really quite messy… For me as an academic, I can just draw pictures and go, woo, this is really fun. If you’re someone like yourself and you have to figure this system out and actually make decisions on that… I think it’s really confusing.
Greg: We have another question right there.
Question: Hi I’m Yonas from Telus. I’m really interested in the difference between music subscription services and TV or movie or audio-visual subscription services, what you want to call them, and anecdotally, I’m getting the sense that a lot of more people in the TV/movie space, accept the price point of 6.99, 7.99, 8.99, 9.99 as an acceptable price point. On the music side, however, I feel like a lot of people say… OHHH, 9.99 for Spotify, kind of expensive. Again, this is totally anecdotal. Can you guys share any insight on that?
Greg: Maybe that’s why Spotify is going to move into video. I’ve read that too.
David: You refer to music services, one of the things I could say is the all you can eat, or buffet style model it doesn’t just… You’re alluding to this but it doesn’t just apply to video. It applies to music, it applies to magazines, a service called Texture, if you want to read all kinds of periodicals. I think… The horse hasn’t just left the barn, it’s in the race, and running around the track already. People have a way for a small amount of money for a month or on an annual basis, they can get a lot of content. The one difference I would suggest between music and video is with music, a Spotify, or Beats Music, or Pandora, slightly different model but with those services, you often have a lot of the same content on those services so I don’t know if you need many of those. Whereas with video, it’s very different. I mentioned 70% of the content on our service is exclusive so you have to have SHOMI. In the same way that something is on another service, you have to have that service. That’s one big difference on that front. But I think the notion of getting real value, I think it’s created this model, what do you call it, binging? You can binge your music, you can binge your magazines or periodicals, but I think the biggest thing for me is that it’s created a new way of consuming any kind of content and that’s why I think Spotify has done really well. They also have an ad support model where you don’t have to pay a subscription. It gets back to my notion that it’s hard to beat free but they’ve done both.
Greg: And well, an audio sort of occupies a different brain space. Really, you can work. You can drive while listening to music and it’s been free over the air on the radio forever. It’s a bit of a different thing to think about video versus audio where I think… I’ve read some researcher on this to back it up that audio has less value in the minds of most consumers and they’re less willing to pay for it.
Natalie: And traditional television, they’ve kind of put… Linear TV has become more like radio for a lot of people. It’s this background thing. It’s not like you’re binging on some kind of series that’s really immersive. You just turn it on and it’s in the background, like music, like radio.
Greg: Exactly. I’ve watched numerous hockey and basketball games with my laptop in front of me working. The announcers you pop up whenever their voices get louder and then you can get back to work. Anyways, that’s how I work. Drew, you have another question, grab the mic right behind you.
Question: It’s an interesting conversation comparing subscription radio to television and music because in some ways, the content, itself, ranges… A little more disposable. You could have ten records and probably listen to those for months, and you’re satisfied or as I would argue, you could give someone ten series… TV is not as disposable but you don’t typically, my kids excluded, watch the same episode again and again. The question I’m asking is how does that play into a subscription based service where you’re constantly having to find the new and the how, and with the price point in mind, how’s that going to evolve over the next little bit? You can’t raise the price but you have to try and find those hits.
David: It’s a fair question. One of the things that we focus on…licensing and content, but what we program is important. So, it’s imperative that we have a great content. We have a small but very passionate content team, very experienced content team that is out there looking, not just for what is popular right now, whether it’s Empire or Jane the Virgin, or whatever it may be, but also trying to look at, in the future, what may be popular. The other answer to your question is we have alluded to it a little bit… How do we show people what those new things are? How do we help them discover those new things on our services? Whether it be a Mr. Robot or a series called Mad Dogs or something called Playing House. Everyone knows what the Empires of the world are, or the Modern Families are, and sure, those get a lot of viewership but a lot of people are looking to us to say what should we watch next, what are those things that we don’t know? We’ll have categories, you may like, you may love, and we also bring a human element to this. One of the things that we’ve had a lot of success with, when we think about of what we program, it comes from our staff or from the people that watch, we watch every single piece of content that’s on our service and we’ll have a collection for instances that will say “It’s a Super Series Sample” or from “My Family to Yours” which is literally programmed by our head of content and our two kids. One of the things that was interesting to me , I wasn’t sure how it would do, but people love the fact that they can go to our services and hey, a real family liked this show, and I will probably like that as well. They may or may not like it but it certainly will attract them to that. Because they’re seeing it marketed, promoted differently and there’s a human element to it. That’s one of the things we talk about differentiation and that’s certainly something we focus on and we try to bring a human element to our curation of content.
Greg: It can’t all be algorithm?
David: Algorithms are fine too but we bring a more human piece to it.
Greg: I have been told we are out of time. Thank you for all the questions. Thank you to the panelists, Natalie and David.
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