Shaw roll outs out unlimited movie service to compete with Netflix

Shaw Communications (TSX:SJR.B) has launched an all-you-can eat movie "club" to combat the popularity of online competitor Netflix, an effort keep its cable subscribers from considering cutting the cord.

The multimedia company announced Friday that its new Shaw Movie Club will offer unlimited access to a selection of movies for $12 per month, with an additional $5 option to be made available later this summer for high definition viewing.

Company president Peter Bissonnette said the idea to counter online movie and TV service Netflix came during customer consultations on Internet bandwidth consumption.

"In those consultations our customers also said 'Why don't you guys offer a movie service to compete with Netflix,'" Bissonnette said from Calgary.

It's expected that most consumers will watch movies through their digital cable boxes, he said, but when they're streamed and watched on computers they will be part of consumers' monthly bandwidth use. Bissonnette said that Shaw's data caps are high enough that it will be "inconsequential in terms of capacity."

"We looked for a service that we could differentiate from Netflix, which would be having more current movies and a big library."

Netflix charges $8 a month in Canada for access to a catalogue of thousands of movies and TV shows. It had 23.6 million subscribers in the United States and Canada at the end of March, double the amount from the same period two years ago.

Internet expert Michael Geist said cable companies have been slow to provide "TV anywhere" on devices such as tablets, computers and game consoles, something that Netflix does.

"My guess is that their vision behind it is not necessarily to take away from Netflix, but to add value to a cable subscriber service so that a user contemplating cutting the cord may think twice," he said.

"One wonders how many cable subscribers already feel that they're paying quite a lot — thank you very much _ and the notion that they have to kick in another $12 to access these movies is something they'd rather not do."

The problem isn't so much that Shaw's movie service could take away customers from pay TV services that it offers, said Geist, a law professor at the University of Ottawa where he holds the Canada Research Chair in Internet and E-commerce Law.

"Their bigger problem is that even at the price it's a whole lot more than the $8 Netflix is charging."

Shaw (TSX:SJR.B) offers a relatively limited number of titles when compared to pay TV movie channels, but the movie service could steal away some customers looking for cheaper alternatives on their cable bill.

By comparison, it typically costs $15 to $20 a month to order a pay TV movie service.

Shaw's movie club website currently displays 139 titles, with some movies released last year, including "The Town, "The Expendables" and "Burlesque," movies also available on pay TV channels such as Corus' Movie Central, a cable channel that offers recent Hollywood hits.

Analyst Mark Tauschek called it a "defensive move" against Netflix, noting that Rogers (TSX:RCI.B) has been offering a similar on-demand service for several years.

"I hesitate to say it's a shot across the bow at Netflix, but I think they're sort of saying we have to offer something competitive to Netflix," said Tauschek, director of research at Info-Tech Research in London, Ont.

"I just can't fathom why anybody would pay $12 for it."

Shaw's movie service is also available through an iPhone or Android smartphone mobile app. The service is only available in Calgary and Edmonton for now.

Shares in the company added 15 cents to close at $21.79 Friday on the Toronto Stock Exchange.