Cable cord-cutting numbers soar in Canada thanks to Netflix, high prices, says report

The number of Canadians cutting the cord is soaring in Canada, says anew report.

According to theConvergence Consulting Group, 190,000 Canadians ended their ties with traditional TV in 2015. That's an 80 per cent increase from the previous year when 105,000 people cut the cord.

"It's almost a doubling of a loss," comments Brahm Eiley, president of theToronto-based market research company. He says the jump is statistically significantbecause it's such a radical shift compared with just two years ago.

According to his numbers,only 13,000 Canadians cut the cord in 2013, while in2012 there was actuallya gain of 32,000 TV subscribers.

Eiley expects the big drop in 2015 to be "the new normal." His company forecasts that 2016 will see a decline of 191,000 TV subscribers in Canada.

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Convergence Consultingdevises its report based on an analysis of information including interviews and company financial reports.

The Netflix factor

Eiley says there are two big factors driving the cord-cutting craze: the power of Netflix and pricey telecom services.

According to his report, Netflix had 4.9 million Canadian subscribers in 2015. That's a rise of 58 per cent compared with 2013.

"Netflix's growth has not abated in Canada," says Eiley. "It just keeps adding a huge whack of customers every year."

Part of Netflix's allure is that it typically only costs Canadians$10 a month. Another attraction these days, says Eiley, is that the streaming service has added much more content to its Canadian library.

Canadians alsonow have more streaming options aside fromNetflix. They include Shomi, CraveTV, and the newRogerssports streaming service.

Eiley predicts cord-cutting numbers will continue to rise as more streaming servicescrowd the Canadian marketplace.

"As the alternativesreally grow in Canada, we'll be revising our forecasts upwards," he says.

Cutting cable cuts costs

Eiley also points to price as a reason why more Canadians are cutting ties with cable.

"The economy is OK, but it's certainly not great. People are looking to cut costs," he says.

Eiley points out that Canadians pay, on average, lower cable prices than in the U.S. But he says we fork out much more for internet service.

According to a 2015 Organization for Economic Co-operation and Development study, out of 34 countries, Canada had the fifth highest entry-level prices for fixed broadband internet subscriptions.

But when it comes to making tough budgeting decisions, it appears Canadians are more inclined to cut their cablerather than their internet service, which is seen as a necessity these days.

That's the case for Amanda Gray from Sudbury, Ont. She's currently in negotiations with her telecom providerto cancel her cable subscription but keep her phone and internet.

Gray says her family was paying $180 for all their products, a price she found too high. So she downgraded to a basic TV package and turned to Netflix to fill the gaps.

Now she says her family barely watches their cable TV. "We put a baseball game on, on the random Sunday that my grandparents are here for dinner," she says.

Mostly, her family tunes in Netflix. "There's no commercials, there's no waiting for another episode," says Gray.

She especially likes that one of her favourite series, Scandal, is now updated with a new showevery week instead of having to wait a year to watch a new season.

"I feel like cable is almost a thing of the past, like dial-up internet," says Gray.

Canadian pirates

Eiley highlights a surprising statistic in his findingsCanadians are bigger cord cutters than Americans.

He says that the U.S. saw about a one per cent decline in TV subscribers in 2015. But Canada saw a bigger 1.5 per cent decrease.

On the surfacethat seemsodd because Americans have access to so many more streaming services such as Amazon, HBOand Hulu.

However, it appears that many Canadians find "creative" ways to watchshows and moviesthat they can't legitimately stream. Methods include illegal downloading and virtual border hopping to access Netflixcontent restricted toother countries.

It's "our dirty little secret," says Eiley.

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He stresses that it's hard to truly chart the number of pirates in Canada and that the activity is probably not on the rise. Instead, he concludes, "piracy is just a constant" in our culture.

Future viewing habits

It's important to remember that most Canadian households still subscribe to traditional TVmore than 11 million at last count.

But there's no denying that cord-cutting numbers keep on rising. Some industry analysts had speculated that the new CRTC-mandated $25 skinny basic TV packages would help stem the tide. But there appears to be little interest in the new offering.

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On the plus side for telecom providers, Eiley says, the number of internet subscribers is growing and people aren't clamouring to give up their wireless phones.

But cable is a service customers can cut without losing access to content.

Gray admits thatif she didn't have Netflix as an optionshe wouldn't be about to cancel her TVsubscription.

But, because she can find alternatives, she sees cable as "just one of those things that's phasing out."