MONTREAL – Watching television on the Internet is cheap and convenient, but so far only a small number of Canadians have cut the cord on traditional viewing as TV providers offer discount prices and spend more on programs to keep customers who pay bigger monthly bills.
The death of traditional TV watching has been exaggerated so far, say analysts who track viewing habits.
“The truth of the matter is the revolution hasn’t come,” said Brahm Eiley of the Convergence Consulting Group in Toronto.
It’s slow moving with about 400,000 TV subscribers — or 3.5 per cent — out of 11.8 million who have cut the cord since 2011, Eiley said, adding cord cutting started after the arrival of online subscription service Netflix in late 2010.
“TV is not dead,” Eiley said.
Canadians watch about 28 hours of TV a week and another three hours on the Internet, according to the Canadian Radio-television and Telecommunications Commission.
But the movement to online viewing can’t be ignored because it has a cost for TV providers. The average revenue that a TV customer generates is $65 monthly, compared with almost $45 for an Internet customer, Eiley said.
One viewer who left traditional television behind is Matthew Duffie, who hasn’t had cable for seven years and watches TV online and subscribes to Netflix for $8 a month.
He said he may never return as a traditional TV customer.
“If I could pick about 10-ish channels that I would want, then maybe,” said Duffie, 33, who works in alarm systems. “Other than that, I would be hard pressed.”
The federal government wants to give consumers more choice and has asked the CRTC to do a report on steps it can take toward unbundling TV packages containing multiple channels that viewers may not want.
TV providers are fighting to keep every subscriber and Bell’s Fibe TV has been leading the way with aggressive promotions noted by competitors Rogers and Videotron, which have lost customers in the intensely competitive environment.
Mario Mota, a consultant with Ottawa-based Boon Dog Professional Services, said TV customers are calling their providers constantly for better deals to lower their bills. Cable, satellite and Internet protocol TV providers must decide whether they want keep these customers with “sweetheart deals,” he said.
Eric Rosenquist, who has a blog called Adventures in Canadian Cord Cutting, said he cut his satellite TV service in 2012 after the Stanley Cup playoffs due to annual prices hikes. One way he satisfies his hockey watching is with an NHL streaming package.
Rosenquist said a real change will come in viewing with younger Canadians, calling them “cord nevers,” an industry term used to describe those who don’t bother at all getting a TV subscription. They will only consider a television subscription if it suits their budget, he said.
“They will wait until Bell or Rogers, Shaw or Telus comes out with something that they say, ‘Yeah, that’s worth paying $25 a month,'” said Rosenquist.
Traditional television is still tops over Internet viewing, though, because TV providers have more money to buy programming than Netflix or other online competitors, said Mota.
“The biggest complaint about Netflix in Canada is there still isn’t enough content,” he said, estimating that Netflix Canada has between 2.5 million and 3 million subscribers.
“Can you have a sufficient menu of content that will keep people in your universe and that’s where television remains king,” Mota said.
Convergence Group’s Eiley said Netflix is paying $2.5 billion a year for programming while North America’s TV providers pay $50 billion yearly.
“As Netflix has to negotiate or make new deals, it will have to pay much more for content. At some point, push is going to come to shove with Netflix and they’re either going to have to raise prices or cut their programming spend.”