Four reasons why Shaw bought Wind Mobile
Shaw Communications buys WIND Mobile for a reported $1.6B
Shaw Media, what took you so long? After playing second fiddle to the likes of Rogers and Bell Media for several years, Shaw Media has gotten back into the game with their acquisition of WIND Mobile.
The deal makes sense for Shaw Media on several fronts.
1) Shaw is weaker in the east. With properties such as Global News dominating on the west coast, Shaw was positioned as second or third tier in the central Canada and key Ontario markets. With WIND mobile, Shaw can leverage the property to stream existing programming, and to provide an incentive to 'bundle' mobile phone, internet and television products. WIND Mobile initially launched in Ontario in 2009 and has strong roots in the area.
2) Shaw profits are falling. Shaw Communications Inc. reported a drop in profits during the second quarter in part due to a loss of subscribers due to the new CRTC rule associated with cord cutting. The CRTC ruling banned policies requiring customers to give 30 days' notice before cancelling television, internet or land-line services. This resulted in a one-time loss of about 35,00 subscribers in the quarter (Source: Globe and Mail article from April 14, 2015).
Shaw's current strategy for customer acquisition was to offer new customers with a "triple play" bundle of land-line services along with internet and television. However after the six month promotional discount expired, most customers disconnected. The telecommunications deal should help strengthen their bundle services and retail customer loyal through new package offerings.
3) Streaming is the future and cord cutting is a reality. Shaw's answer to the growing number of cord-cutters has been the Shomi video streaming content. Along with this, Shaw developed their 'on-demand' app to stream their existing content. However a user would be using the on-demand service on an outside mobile network as Shaw did not own their own network. This deal provides Shaw with an extra incentive to build products to add value to existing television subscribers and also to get into the mobile data package game.
4) Data collection. Data is the future. Shaw boxes (amongst others) actively collects data on which programming is watched in a given household. In the near future, television commercials will be segmented to show on Shaw boxes where programming over indexes to a demographic or psychographic of the given household or users. With WIND Mobile, Shaw can now leverage digital behaviours to layer on top of existing known data in order to create a holistic customer profile. This data will help Shaw to compete with the likes of Rogers and Bell Media.