Shaw Launches Movie Club, badly.

Today Shaw launched a new product aimed squarely at Netflix called Movie Club.  Movie Club is very similar to Netflix in that for a flat monty fee users have access to a library of video content that they can watch.  Movie Club itself is an interesting product, but this article is going to focus more on the Shaw's launch of the product today. I'll be frank.  Shaw fumbled the ball on this one, really badly.  A lot of the good talk about Shaw since the restructuring of their Internet plans has been hurt by how this launch was handled, and it is sad to see.

Confusion started literally minutes after the launch of Movie Club.  Shaw put out a news release, and several news publications put articles up on their respective websites about the new service. Even US based Ars Technica and Tech News Today ran with the story (though Tech News Today was able to correct the story at the end, thanks to a live chat room audience).  The reason for this is that the initial reports were that Shaw was going to deliver this service both to set top boxes and through the Internet, but that the delivery though the internet would not count against data caps on user's accounts.

Let me stop and say that again.  The initial reports were that delivery of Movie Club through the Internet would not count against a data cap.

I will stop you there again, because that is not true. But I will get back to that in a second.

Needless to say, the Internet kind of blew up at this.  Net neutrality proponents slammed the move, and many people got very upset at the fact that Shaw seemed to be putting in a plan that gave them an unfair advantage over a service like Netflix.

Then, came the "clarifications."  Shaw's official twitter accounts, Shaw employees speaking on Twitter, Facebook, and Internet forums on behalf of Shaw immediately came running to the public to say "No no no no."  It was clarified to me, along with everyone else, that watching content on Movie Club on a TV through a set top box via the Video On Demand interface would not count against a user's data cap, as the content is transmitted through the traditional QAM cable TV system that VOD content moves through.  Watching content through a computer or other device via Wifi goes through the Internet, and will count against a user's cap.  Shaw employees and PR spent most of the afternoon doing damage control, and trying to get the accurate information out there.  Several news publications put out new stories with clarifications, and Ars Technica updated their story (albeit much later than I would have liked).

So what happened? How did Shaw allow such confusion to happen on this launch?  I've done a lot of reading on the various news articles, and Shaw's news release for Movie Club, and the confusion comes from two simple things.

  • The CEO was quoted as saying that on your box or online, this will not have any impact on your capacity or usage.
  • The news release from Shaw had no indication one way or the other whether this would affect the data cap.

Now, with a quote from the CEO saying one thing, and a news release not disputing that, journalists ran with the idea that all Movie Club content would not count against the data cap. If I were working for one of the many publications that put articles out, I would have done the exact same thing given the information available to me at the time.  Could this be a case of a CEO being mis-quoted? Possibly.  But what is likely is that he just got a fact wrong, or just misunderstood a question.  either way he made a mistake.  Those things happen from time to time.  Engadget has a feature called "C-E-Oh no he didn't" that catalogs tech company CEO's that make mistakes, and it can be quite entertaining.  This is another one of those cases, and unfortunately for Shaw, it kind of blew up in their face.

To Shaw's credit, their PR team worked very hard all day to try to get the correct information out, to clarify to angry customers what the truth was, and to work with news media to get new or updated articles posted.  Unfortunately in most cases where mistakes are made, it takes 10x the amount of effort to fix them, and that is what Shaw faced today.  The net neutrality people might no longer be mad at them, but a new group of people are mad and accusing them of lying, trying to spread mis-information, and confusing people.  It only takes a quick look on Twitter, Facebook, or even Google+ now to see the anger at Shaw over the confusion on this launch.  The Shaw PR team was put in a difficult situation in which there was no way for them to come out in a good way.  i applaud the PR team for doing what they could to try to clean up a pretty nasty mess that was left behind for them.

This confusion during the launch has really masked the actual product they are trying to get off the ground. I've written almost 900 words to this point and I haven't even talked about the actual product that is Movie Club.  That is not a good thing for Shaw, at all.  I should have spent the last 900 words talking about the product, now how they fumbled the launch, and that is unfortunate.

As a quick recap of the above, in case it was still missed in there, Shaw Movie Club will not count against the data cap if being watched through a Shaw set top box via the Video On Demand interface.  Movie club will, like all content, count against the cap if watched through any Internet connected device like a computer or mobile device.

Now, onto the actual product itself, 997 words in.

Movie Club is a subscription service, much like Netflix.  I had actually heard about this service during the Shaw customer consultation sessions earlier this year.  The Shaw representatives there told us that they did have a video subscription service in the works, and that it was being considered as something that would be more valuable than Netflix, because they could deliver it through their existing Video On Demand service and not have it count against a user's data cap.  They stressed that while they probably could not match the volume of movies and TV that Netflix offers to customers, they wanted to focus on quality and getting newer blockbuster movies onto their service before Netflix could. They seemed very excited at this project that they were working on, that has now become Movie Club, but had asked us not to talk much, if at all about it because it was a product still in development and things could change before they launch, if they ever even did launch it. Today, that project finally saw the light of day, and Movie Club was launched. Unfortunately, it simply does not compare to what Netflix has to offer.

To start, Movie Club is a $12/month service, and that is for Standard Definition content only.  Movie Club HD will be launching "later this summer" and will be an additional $5/month, for a total of $17/month to watch HD content. Netflix is $8/month for the entire service, including all HD content.  That means that Movie Club is at a huge disadvantage out of the gate being $4 or $9 more expensive than Netflix. So, if Movie Club is going to be more expensive, it had better be beating Netflix on Movie selection.  However, a quick trip to the Movie club section of shows a total of 139 movies available for streaming.  I don't have an exact number for the Netflix library, but needless to say it is significantly more than that.

But again, Shaw's word to us months ago was that their service would aim to go for quality more than quantity.  A quick look through the 139 titles currently available include many recent titles that are not available on Netflix in Canada, like Burlesque, The Blind Side, The Tourist, and Fast & Furious.  There are also many older moves that are both available, and not available on Netflix at this time.  There are definitely movies on the service that I would like to watch, some movies that I've never seen, but for me personally, I don't think that it is worth the price.  I honestly would not sign up for a SD service at this point.  I have a 47" HDTV and the though of paying $12/month to watch SD movies on it when I can pay $8 to watch HD movies simply does not make sense to me.  Would I pay $17/month for the HD content?  Again, probably not, because I can get many more movies in HD for less than half the price.  Sure, I can't watch Transformers: Revenge of the Fallen on Netflix, but I'm fairly sure that I can find 9-10 other movies that I'm perfectly content watching for less money.  What it comes down to is that for me to want to pay more for Movie Club than I do for Netflix, Shaw has to provide me with a very high number of movies that I want to watch right now that I can't get on Netflix.  And personally for me, they aren't even close.  Shaw does say that they are committed to adding new content every month, but that does not help the fact that right now, today, there are only 139 titles to choose from. Right now Shaw does not have the quantity to match Netflix, nor do they have a high enough number of quality titles to justify the price.

Does that mean it will stay this way forever? I hope not.  I really do think that a market does exist for newer movies on streaming services.  But Shaw's problem is that Netflix is desperately trying to get there as well.  If Shaw wants Movie Club to have any chance of success they either need to get a lot of newer (under 1 year old) blockbuster movies on there very soon, or drop the price significantly.  I think that people might pay a higher price to watch movies they can't see anywhere else, especialy if Shaw can swing a deal to get some movies on to Movie Club that aren't even available on Blu-ray or DVD yet. But as it stands right now; Shaw does does not have a competitive product.

Now, for all the confusion over the actual content delivery and whether or not it counts against a data cap, the fact that users can watch content as much as they want through a set top box and not have it count against a dat cap is one of the things that I actually do think is good about the product.  It is a value-add that Netflix quite frankly cannot match, and a good one at that. Many people have pointed out to me that doing that may get Shaw a visit from the competition bureau, and I think they are right.  But I also do not think that there is a problem.  If the story had been true that Shaw was providing the internet streaming and not having it count against their data cap, then there would have been serious anti-competitive issues.  But Shaw is offering an internet based service that is exactly the same as Netflix, with a value-add of the set top box delivery.  Shaw is not trying to make Netflix worse and less valuable than their product, they are trying to make their product better and more valuable than Netflix.  That is a very important, if a bit subtle, distinction that people need to understand.  You can do anything you want to make your service better as long as it does not purposely make someone else's worse.

the last thing I want to talk about is something I touched on a bit earlier.  Shaw launched Movie Club today in SD only.  In 2011, when HDTV's are commonplace, that is simply unacceptable.  I can't even begin to say how much that move does not make sense to me.  With the promise of the (more expensive) Movie Club HD service coming "later this summer" it would have made more sense to me to wait to launch the service until the HD portion was ready.  There is quite honestly no way I will even consider getting Movie Club in SD when it's main focus is on delivering newer movies, which are filmed specifically for HD, and do not look nearly as good in SD.  If I want to watch Transformers, I will be doing it via some method that will let me watch it in HD, which Shaw does not offer today.

To say that Shaw fumbled the ball today would be an understatement.  From communication issues early in the day, to actually launching at a product that is in many ways inferior to some of it's main competition, to launching without HD; Shaw made a mess of this product launch.  Could Shaw rebound from this and make a good product?  Absolutely.  Like I said.  I do think that there is a market for a "premium" streaming service.  However Shaw needs to get there before Netflix can do it cheaper if they want any chance of success, and they need to do it quickly.  It may be a bit unfair, but we live in a world where news moves fast, and in many cases the first impression is everything.  Shaw has left a very bad first impression here, and if not fixed quickly, they risk having the product slip into irrelevance before it even gets off the ground.  The product launched poorly today but it still launched. And because of that, the clock is ticking.  Can Shaw fix it before the time runs out? We'll see.

[Read] - Shaw Movie Club Press release (PDF link)

[Read] - Original Calgary Herald Article

[Read] - Montreal Gazette article with clarification

[Read] - Ars Technica article, original with update

[Read] - Shaw Facebook discussion thread.

[Read] - Shaw info twitter account.