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Goodbye binge-watching: Netflix, others, bringing back ad breaks in coming weeks – Global News

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Canadian Netflix users will see a new membership option starting Tuesday that costs less but comes with a catch: commercial breaks inserted into their favourite shows.

After years of uninterrupted binge-watches, the world’s largest streaming service is making way for a word from its sponsors. And as inflation continues to pinch consumers, the proposal of a cheaper Netflix plan may sound enticing to some.

Netflix isn’t alone in believing that commercial television is back in a big way.

Read more:

More Canadians bidding goodbye to streaming subscriptions as cost of living climbs: study 

Several free ad-supported streaming services will launch in Canada over the coming weeks, all of them built on a business model that taps into the country’s multi-billion advertising industry to finance and acquire programming.

Analysts say together the platforms could reshape how we watch and pay for television. More viewers are complaining that streaming costs have soared near the level of their old cable bills, which has pressured each service to reconsider its business model.

“Consumers are faced with more choice, more platforms and are making more deliberate decisions as to which streaming services they keep and which ones to cancel,” said Justin Krieger, senior technology and media analyst at consultancy firm RSM Canada.



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Disastrous week for Netflix creates concern for future of streaming


Of the newcomers, Pluto TV debuts on Dec. 1 with more than 100 channels of free TV series, movies and sports that stream “live” online on a platform that mimics the experience of channel surfing, complete with the commercials.

Around the same time, CBC will introduce a revamped free streaming news channel that will be available on CBC Gem and multiple other streaming platforms. A flagship program hosted by Andrew Chang of “The National” will be the main attraction, with advertisements interspersed throughout the day.

South of the border, Disney Plus rolls out an ad-supported option later this year with some industry observers predicting it will apply the same model in Canada soon after. The ad tier will be introduced at the price of Disney’s existing commercial-free service. Subscribers who want to eliminate the ads will have to pay a premium.

Each service has its own reasons for getting into the ad business.

Read more:

Netflix recovers from subscriber slump, projects gains from advertising option

For Netflix and Disney, one of the main drivers is growing revenues as programming costs soar and competitors lure away subscribers.

Meanwhile, the free streaming services use ad revenues to fund a slate of original and licensed programming, which puts incredible pressure on Netflix to maintain its leading position with attractive new films and shows.

Netflix’s pitch

Earlier this year, after repeatedly swearing off the possibility of ever getting into advertising, Netflix changed its tune by announcing it would launch an ad tier for subscribers in key international markets.

In Canada, the “basic with ads” plan costs $5.99 per month _ less than the plans without ads, which start at $9.99 and peak at $20.99 a month.

As a trade-off for the savings, Netflix says subscribers will be presented with an average of four to five minutes of ads per hour played before and during their TV shows and films.

Video quality on the Netflix ad plan tops out at 720p, leaving full high-definition streaming at 1080p and 4K for premium subscribers. Viewers also won’t be able to download titles on their devices and not everything in the service’s library will be available.

Those restrictions will sour the appeal to many Netflix devotees, suggested Carmi Levy, a technology analyst based in London, Ont.

He said Canadians were sold the idea of a commercial-free Netflix a decade ago which led other entrants in the market to mimic their approach with similar models.

That’s different than the United States where Peacock, Paramount Plus and HBO Max all offer less expensive ad tiers as a subscription option, while Crackle and Amazon’s Freevee are among the major players in free, ad-supported platforms.

“Canadians don’t have that legacy of experience and as a result may be more resistant to the way Netflix is introducing that service,” he said.

“It’ll take time for Netflix and others to educate Canadians on the advantages of paying less for a streaming service and getting ads served up in return.”

Do Canadians want ads?

Kaan Yigit, a technology analyst at Solutions Research Group, said a survey conducted by his firm earlier this year found U.S. viewers have already adopted ad-supported subscription options.

About 40 per cent of HBO Max subscribers signed up for its lower-priced ad tier, he said, while an average of 58 per cent of subscribers used the cheaper versions of Paramount Plus and Peacock.

He estimates a modest 20 per cent of Canadian Netflix subscribers will join the ad tier over the next 12 to 18 months.

However, Netflix’s initial sign-up numbers won’t be the best indicator of long-term success for the ad model, suggested Levy.

Subscribers who joined for a deal could be turned off if the ad breaks become as long as they are on network TV stations, which typically air 20 minutes of commercials per hour.

“The devil is always in the details whenever a streaming provider introduces an ad-based tier,” Levy said.

“What matters most is how intrusive that presentation of ads is to the overall viewing experience. And if it is intrusive in the way that consumers have long complained about traditional broadcast television ads, then this could very well be a non-starter for Netflix.”

The ad agencies

Until those intricacies play out, advertising agencies say their clients are salivating over the prospects of new placement options in the Canadian market.

“What we’re seeing is a lot of initial excitement and questions around Netflix, in particular,” said Marissa Cristiano, an account director at Cossette who says she’s “exploring” ad buys on the service with some clients.

“They’ve done a really good job of creating … the type of content that brands really do want to ally with.”

Cherie Hill, senior vice president of media at marketing firm Society, Etc., said she anticipates Netflix ads will be angled toward “budget-conscious” shoppers, with a strong focus on consumer staples, household items and car companies.

She doesn’t anticipate much blowback from viewers, mainly because Netflix is making it an opt-in proposition.

“If you’re choosing to have the commercials, it’s not going to leave a negative experience,” she said.

“They’re providing an option and they’re managing expectations.”

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

The Canadian Press. All rights reserved.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

The Canadian Press. All rights reserved.

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