Rogers NHL streaming plan result of OTT shift: analyst

Rogers Communications Inc.'s launch of a hockey streaming product shows the company wants to "build up its OTT capabilities" as more TV viewers move away from linear television and toward streaming options, RBC Dominion Securities analyst Drew McReynolds said. McReynolds noted in an email that new streaming services, such as the NHL GameCentre Live service Rogers announced Wednesday, "contribute to subscriber growth but also data consumption. Expect Rogers to make additional announcements around its NHL deal as we move forward." He added Rogers' announcement last week that it was introducing the Netflix-like Shomi service in partnership with Shaw Communications Inc. was also consistent with its move to ramp up its OTT service. Rogers said in a press release Wednesday that its NHL GameCentre service will offer more than 1,000 regular season games in the 2014-2015 season, including the Stanley Cup playoffs. Last season, GameCentre was offered directly by the NHL. Rogers' iteration will offer "50 per cent more games," the company said in the release. The service will be available to anyone for $200 for the season, with Rogers' wireless data and high-speed Internet customers receiving a free trial until the end of this year. Customers can access it through the Rogers website, and though an app for computers, tablets and smartphones. It will count towards customers' data caps, Rogers said. Some of the content will require authentication: customers "with a regional Sportsnet subscription with a participating BDU" will have access to live streams of regional games played by their local team," which wasn't previously available in the NHL's version, the release noted. Subscribers of Quebecor Inc.'s TVA Sports will have access to French-language broadcasts, while Montreal and Ottawa-area subscribers will gain access to "up to 111 games broadcast live in French," including 60 Canadiens games and 54 Senators games, the release added. The previous version of the app offered by the NHL was not available on an authenticated basis and didn't include live streams of national games, playoffs, the NHL all-star game, Winter Classic, stadium series, French-language games or regional in-market games, a Rogers spokesperson explained in a phone interview. Rogers bought NHL rights for the next 12 years for $5.2 billion last year, and said in April that the purchase was linked to $3.29 billion it spent on spectrum in the 700 MHz spectrum auction. Rogers Media president Keith Pelley said during the Wednesday announcement that "live streaming of video on your mobile devices is absolutely exploding, and sports is at the leading front." "Today's announcement will be one of many that we will announce in the next 35 days," he noted. "This is all about the consumer, the customer, on deciding what they want to watch, when they want to watch it, on what device they want to watch," Pelley said. Gord Hendren, president of Charlton Strategic Research, said Rogers' offering of content on a free trial to customers was a "smart move." He said making the service available to non-TV subscribers allows Rogers to reach customers it wouldn't otherwise be able to, who may not have even considered a cable package. "It gives them content, and if they like the content, then they will pursue the content," Hendren said in a phone interview. "You could argue this is a new way of reaching out and expands the scope of their product reach beyond pay TV." "I could be a university student somewhere who does not have a cable subscription but I could watch NHL hockey and do it online through this service," he said. "That's a great example of a young, emerging target audience they would love to reach." The pricing of the service allows Roger to continue earning revenues from the product even if more people move to OTT watching rather than linear, Hendren noted. "It's becoming a choice … and then Rogers is just packaging differently," he said. "It's an example of content that's preferred live, it's very topical, it's obviously the gold standard in Canadian sports, so it's a matter of how you want to buy it. Do you want to buy it through an online product or do you want to buy it through pay-TV?" Greg MacDonald, an analyst with Macquarie Capital Markets, also pointed to the pricing of the service in a phone interview. "They want to make sure that their pricing is high enough to set the bar on premium content, which is what sports is," he said. "You can see where the market's going to over five years, which will be some combination of streaming services and maybe one or two services from a cable provider." He said content owners have to figure out how much to charge for their services online. "They're trying to make sure their premium content is priced appropriately." MacDonald said the whole broadcast distribution industry is likely to lose pricing power as we move to an a-la-carte world, in which services are available individually and the CRTC is mulling allowing pick-and-pay TV, but that ownership of sports rights and the high viewership that comes along with it allows companies to "keep as much pricing power as possible in a world where pricing power for the industry is disappearing." — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

Rogers NHL streaming plan result of OTT shift: analyst

Broadcast | September 3, 2014

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