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TV's digital switch boosts appeal of cord-cutting Add to ...

Sue Diaz Halminen and her husband were slightly worried about what they’d miss when they cut their ties to Rogers Cable.

But about a month and a half later, as her husband flips through game shows, entertainment news, and an episode of the The Simpsons, any fears they might have had are long gone – thanks in large part to the more than $100 per month they save getting these TV signals for free.

“I really thought we’d miss it, but we don’t,” the mother of two says, pointing at the high-definition images on screen in her east Toronto home. “Look at that! The colours are so bright. It’s crazy clear.”

Ms. Diaz Halminen, whose family gets by with a digital antenna, an Apple TV and a Netflix subscription, is among a new breed of gadget-savvy viewers who are cutting their ties to TV subscriptions. And while they are part of a small minority – less than 10 per cent of Canadians get their TV over-the-air – viewers like them could soon pose a problem for cable and satellite players like Rogers Communications Inc. , BCE Inc. and Shaw Communications Inc.

So-called cord-cutting might not yet be a major threat to those companies. But as Canadians increasingly look to alternative platforms to watch TV and movies, it’s a disruption the industry cannot afford to ignore. Canadians spent an average 61.2 billion minutes online in June, a 7 per cent increase from the year before, according to Internet tracking firm Comscore. A major slice of that time, 25.6-billion minutes total, was spent watching video – a 42-per-cent increase from last year. Since its launch last September, Netflix has surpassed one million subscribers in Canada who pay $7.99 per month for its streaming video service.

And as Canada’s digital transition comes into effect next week, the appeal of sticking with over-the-air channels could increase. Those stations will be moved off the analog spectrum – with its sometimes fuzzy signals and occasional snowy screens – and converted to crisp, high-definition digital signals.

“There will be a subset of the population who, when they realize just how good the [digital] signal is – particularly those who are close to the U.S. border – there will be a strong attraction to looking at over-the-air television,” said Jerry Brown, a media analyst with PricewaterhouseCoopers.

In response to viewers’ changing habits, TV providers such as Rogers are focusing on building their own Netflix-like services – such as Rogers on Demand Online or Illico Web in the case of Vidéotron Ltée. David Purdy, vice-president of video products for Rogers Communications Inc., believes this type of “TV Everywhere” platform will help distributors hold on to their subscribers.

“There’s always going to be a small percentage of the market that is willing to go to great lengths not to pay for their TV signals,” Mr. Purdy said. “But most of our customers have told us they want it to be simple.”

It may be foolish at this point to ring the death knell for cable and satellite TV, but the U.S. example is informative. When the United States had their digital TV switch in June, 2009, only a small minority of Americans who got their TV for free abandoned the over-the-air model in favour of a TV subscription; 74.3 per cent of rabbit-ear households had gotten their hands on digital tuners by the end of that summer, according to Nielsen.

In the meantime, Pickering, Ont.-based V and E Antenna, which installs digital antennas for households, has seen business take off. It usually receives about 40 calls per month from prospective customers, but in July and August, that call volume has tripled. Many of the customers they visit complement the antenna signal with Boxee boxes, Netflix subscriptions, and Apple TVs, president Eric Skura says.

It’s technology that Lisa Christensen would love to take advantage of. In a neighbourhood in Toronto not far from Ms. Diaz Halminen’s house, Ms. Christensen has repeatedly suggested to her family that they cut their cable subscription in favour of an antenna and online options. But the sports fans who live with her – her husband, teenage son, and the most sports-crazed of them all, her 90-year-old mother – have overruled her, she says, hitting on another major strength the subscription-TV companies have to fight against a changing industry.

“There’s a couple of networks that really have a monopoly on sports content,” she says. “I cannot seem to find an alternative.”

Editor's note: An earlier online version of this story and the original newspaper version of this story gave incorrect figures for how much time Canadians spent online in June, and how much of that time was spent watching video. This online version has been corrected.

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