On September 24th, Netflix launched their on-demand media content streaming service in Canada. Netflix is a digital media service which serves to deliver TV episodes and movies directly onto consumer’s vehicle of choice (receivers include Sony Playstations, Apple TVs and iPhones and personal computers). While it’s Canadian lineup has been initially disappointing, it has a number of analysts wondering what its inception in Canada means for the country’s incumbent TV services. The big draw for Netflix is its on-demand service for far cheaper than what the natives – Shaw, Rogers and Telus – are offering. Netflix offers unlimited streaming for $7.99 a month, allowing users to access the soon-to-be vast library of television and film content. Shaw charges $36.95 a month for basic cable networks; a plan which can be supplemented with movie channels such as HBO for just under eighty dollars. This means cable customers are going to be given the alternative to scheduled TV times and limited movie options for less than a quarter of the price with Shaw. On-demand options offered by their cable box program are financed on a pay-per-view basis and individual programs can cost the same as the monthly subscription to Netflix.
With the introduction of an on-demand, online player such as Netflix will cause reverberations across the TV and media provider marketplace. The big three cable providers have enjoyed a mogopoly (monopoly formed when “competitors” hold their prices at similar levels) over Canadians and will have to think deeply about their upcoming strategies. They must consider if lowering prices is a viable option in holding marketshare. Will consumers stick with the cable giants for time based programs such as newscasts and sporting events? Will the mainstream market embrace such a new idea as on-demand programming? Is Netflix’s brand and feature set strong enough to break through the already crowded and well-known market? Such questions will need to be considered by the cable giants before making the next step.
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