Bell Canada, the wholly owned subsidiary of BCE Inc. (BCE - Free Report) , is set to become the exclusive marketing partner of Quibi, an upcoming mobile video platform scheduled to be launched in the first week of April. In addition, Bell Media, a business division of BCE focused on mobile content, will be the sole provider of Canada’s news and sporting events. It, in turn, will be an integral part of Quibi’s Daily Essentials, which will feature curated news, entertainment and inspirational content each day.
The partnership is likely to help users adapt to the evolving media landscape and remain abreast with various streaming content on the go. Quibi has reportedly raised $1 billion for the startup streaming business, which is primarily centered on short video updates that are 10 minutes or less in duration. These video feeds are called ‘Quick bites’, based on which the name of the company is coined.
Unlike other streaming channels, Quibi lets users switch between portrait and landscape video instantly when they rotate their phones. The service is slated to be launched in Canada at a monthly price of C$6.99 with advertising and C$9.99 without ads. Quibi will be offered in three different tiers of content: star-studded “lighthouse” productions; mid-tier “quick bites”; and news-focused “daily essentials.” While the “lighthouse” content aims to break a typical two-hour movie into 12 chapters, the “quick bites” will focus on fresh content as Quibi plans to release three hours of new content every weekday, rolling out more than 175 original shows and 8,500 episodes within the first year.
It appears that the latest entrant in the streaming fray has a quite different business model unlike Netflix, Inc. (NFLX - Free Report) , The Walt Disney Company (DIS - Free Report) or AT&T Inc.’s (T - Free Report) upcoming HBO Max.
Such efforts are likely to strengthen the market position of Bell Canada, which operates BCE’s wireline (Bell Wireline) and wireless (Bell Wireless) businesses. With rapid growth in video and other bandwidth-intensive applications, BCE continues to invest substantially in LTE, broadband and fiber in order to provide additional capacity on Internet and wireless networks. The company is further likely to benefit from healthy postpaid business as it continues to enjoy solid subscriber additions and higher revenue contribution from prepaid services. Significant investments in network coverage, lucrative data plans and launch of new handsets are likely to drive subscriber base expansion.
However, BCE continues to face near-term headwinds that limit its growth potential. The price cap rules introduced by Canada’s regulators are limiting rate increase and reducing the amount that incumbent carriers can charge competitors for accessing their network. As BCE attempts to offset inter-carrier price caps by raising fees of its end users, market dynamics and dictating elasticity have reduced overall demand as customers switch to lower-priced carriers. Moreover, the company’s local line access for traditional telephony service continues to face a decline among large customers due to higher wireless substitution and migration to IP-based services. This is reflected by persistent erosion in overall network access services on a year-over-year basis, hurting revenues of local and long-distance operations.
Nevertheless, BCE is likely to benefit from robust activities in the wireless business, strong subscriber additions, fall in churn rates and focus on technology upgrades. The company continues to concentrate on six strategic areas — investment in broadband network and services, accelerating wireless services, leveraging wireline momentum, expanding media coverage, improving customer service and achieving a competitive cost structure. These initiatives are expected to generate higher revenue per user and attract new customers.
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