Bolder Thinking Blog

[Part 2] Canada vs US Telecom: Video

March 13th, 2020 | Emily Groch

[Part 2] Canada vs US Telecom: Video

The explosion of streaming video has been felt in both Canada and the US, driving consumers to cut traditional cable packages and putting the pressure on incumbent players to update their approaches to video. US cable/satellite providers have experienced greater pressure from streaming video, as the US market includes a much wider range of streaming video options, giving its customers maximum choice and flexibility. Although Canadian pay-TV providers have been able to maintain a stronger hold on the video marketplace, they cannot escape the pressures of cord-cutting and the consumer behaviors and attitudes that are driving the trend.

The influence of streaming video

A look at the top subscription streaming video services (sVODs) in Canada and the US shows that a great many of them, such as Netflix, Amazon Prime Video, Disney+, DAZN and YouTube Premium, are available in both countries (although content libraries differ). And popular free, ad-supported services like Roku Channel, Tubi TV and Xumo are also available in both countries. However, there are also hundreds of niche streaming services, many of which are available only in the US. Additionally, premium services such as HBO Now and Showtime are sold as stand-alone streaming services in the US, whereas some of this content is included in the base Crave subscription (owned by Bell) in Canada, and some of it is offered as a Crave add-on. There’s an argument to be made that Canadian consumers save money by getting some of this premium content through their Crave subscription. At the same time, they do not have the flexibility of choice to select HBO Now, Hulu, Showtime, or Starz separately.

In addition to free, ad-supported streaming services, and sVODs, Americans have a number of streaming live TV services, such as Hulu with Live TV, Sling TV and YouTube TV, available to them as alternatives to cable TV. These services are often selected by cord-cutters who want to access live TV, including sports and other major live events. They offer the advantages of streaming (no contracts, no equipment rentals, no installation, easy-to-understand pricing), while also offering live TV and (in most cases). Streaming live TV services, in sum, had more than 10 million subscribers at the end of 2019. Streaming live TV not only adds to the wealth of options US consumers have for streaming video, but also heightens competitive pressure on US cable/satellite providers.

Because Americans have more sVOD options than Canadians, it’s none too surprising that US consumers were more likely than Canadians to report watching video on a paid service (60% vs. 51%), according to Mintel research on digital video in the US. But even with fewer options, more than half of Canadian consumers said they use a sVOD. Additionally, Canadians were slightly more likely than Americans to report using free streaming services (51% vs. 44%),  according to Mintel research on digital video in Canada. With such an appetite for free streaming services in both the US and Canada, both marketplaces should expect to see these services proliferate in 2020 and beyond, as we outline in Comperemedia’s 2020 Telecom & Media Trend “Streaming Free-for-all.”

With consumers in both countries openly embracing the benefits of streaming video services, such as freedom from contracts, easy-to-understand pricing and simple plans, incumbent pay-TV providers are responding. As we outlined in another 2020 Telecom & Media Trend, “All Clear,” providers are looking to ape some of consumers favorite things about streaming video, and as such many are trying to reduce service complications and “gotchas” to make services, agreements, and communications clear and simple for customers.

Legacy providers integrate streamers

Many providers have embraced streaming video by integrating those services into cable platforms, making it easier than ever for consumers to get to the content they love from one place. Comcast’s X1 platform is a prime example (although certainly not the only one) of this approach. By integrating Comcast’s cable content with video from streaming services, X1 enables customers to easily search across all of their content options with ease via its signature voice remote. It also integrates home security and advanced Wi-Fi capabilities. While X1 hasn’t stopped Comcast’s video subscriber losses to cord-cutting, it has likely slowed them by offering an easier and more convenient premium cable experience.

Many cable providers have licensed the X1 platform, including Rogers, Shaw, and Videotron in Canada, and Cox in the US. In their marketing, these providers have highlighted the differentiating features of the platform, especially the voice remote. They are clearly hoping that X1 will help buoy their own premium video subscribers.

Incumbent video acts more like streamers

Other providers, such as Eastlink and Rogers, allow customers to swap channels in and out. This appeals to consumers’ love of the flexibility they get from streaming video, with which they can make changes month-to-month, rather than being locked into a package for a one- or two-year contract. Eastlink launched TV Channel Exchange in 2016, enabling customers to swap out channels they don’t want in their TV lineup with ones they do want. Customers subscribing to qualifying video services can swap from a menu of more than 150 channels—and they can make the changes themselves online. Meanwhile, Rogers Flex Channels enable Ignite TV subscribers to swap out channels in their package once every 30 days. Within the first 30 days of service, they can make as many swaps as they want. Canadian providers also enable customers to pay for channels individually or in small bundles.

In 2020, Verizon launched Mix & Match for Fios TV and Internet subscribers. Mix & Match eliminates contracts, and gets a little closer to transparent pricing. Verizon’s marketing features a common message about paying for “what you want” and having “no surprises.” However, the advertised price is still hiding a variety of fees, which becomes apparent when looking at the fine print. “Mix & Match” is a step in the right direction to offer better transparency and flexibility, but it doesn’t go far enough.

Finally, we’ve observed cable providers launching “skinny bundles” and other streaming services for their internet subscribers who don’t want to take a fully baked cable TV product. This approach helps keep the customer in the cable provider’s ecosystem and adds value to the broadband subscription. We will explore the topic in more depth in the third installment of this series, “Canada vs US Internet.”

Emily Groch

Emily Groch

Emily Groch is Comperemedia’s Director of Insights, Telecommunications, providing omni-channel marketing analysis and competitive insights to telecom providers.