Written Assignment

Situation Analysis Report

For
Scenario - Should Rogers launch a Netflix-like rival service?
By:
Student 11
Student 22
Student 33
Student 44

Sec. 011

Submitted To:
Professor Francescucci
Ted Rogers School of Management
in partial fulfillment for the requirements
for
MKT100-Principles of Marketing
Submitted On:
Month Day Year
Ryerson University

TABLE OF CONTENTS
1. Executive Summary

2. Situational Analysis Strengths

3-4

3. Situational Analysis Weaknesses

4-5

4. Situational Analysis Opportunities

5-6

5. Situational Analysis Threats

6-7

6. Recommendation

8. Apendix A: Tables

8-10

7. References

11-12

INTRODUCTION
As the largest cable television provider in Canada, Rogers Communication
Incorporated is interested in expanding its market into the digital streaming industry. In a
highly concentrated market, leaders like Netflix and Hulu have a majority of the market share
and similar features. To assess the risk and to aid in developing a marketing strategy, this
report will discuss and analyze the organizations internal and external environment.
SITUATION ANALYSIS - STRENGTHS
Rogers has numerous strengths, which can lead to the success of launching a rival
service to Netflix. The number one strength is Rogers financial stability. Rogers has been
around since 1960 and over the years, they have developed knowledge, techniques and
experience on how to make the most profit. In 2013, Rogers net income was $1,769 million,
which is money that can be spent to grow this company further through market penetration,
market development, product development and diversification; launching a Netflix type
service would be a product development strategy. (Rogers Communication Incorporated,
n.d.) This type of growth strategy is much more reasonable than any other strategy because
Rogers has the financial support to take a risk and launch a new service. Rogers already
has Rogers On Demand which is a service that has pre-recorded TV shows and movies that
customers have to load and watch. This is a strength for Rogers because they already have
a TV and movie streaming service; it just needs to be updated to increase speed, and
efficiency. In the case article, it states that Rogers has already spent more than $100 million
on deals to build an online library of TV shows and movies that subscribers can stream.
(Michael Oliveira, 2014) Rogers has the deep pockets to invest in the development of this
service, which will bring in a lot of profits. Therefore, the financial stability ensures that
Rogers can take the risk of launching a new service.
Since Rogers has been around since 1960, over the years, they have developed an
overall strong brand reputation. With an estimated 2.3 million customers in Ontario alone,
they have immense support from customers. Rogers provides a healthy workplace
environment, exhibit environmental concern, display a strong relationship with communities
and have an ethical supply chain. All theses characteristics lean towards a reliable and
honest company. (Rogers Communication Incorporated, n.d.) In 2012, Rogers invested
$41.3 million in training and development for their employees. This investment shows that
3

employees are assets and Rogers is trying to keep them up to date with the latest
innovations. By the end of 2012, 42.6% of customers converted paper billing to online billing
reducing paper usage and 53.4% of their waste was taken out of landfills by recycling and
reusing. (Rogers Communication Incorporated, n.d.) Rogers has taken the initiative to protect
the environment by doing their part and reducing pollution in whatever way they can. Rogers
also has ensured their supply chain management is ethical and reliable. (Rogers
Communication Incorporated, n.d.) They made an annual questionnaire process to identify
the top suppliers and make sure they fit the Rogers Supplier Code of Conduct. This code has
been created to make sure that the suppliers affiliated with Rogers are ethical. And finally,
Rogers spent 2.98% of pre-tax profits, $70 million, towards donations in 2012. (Rogers
Communication Incorporated, n.d.) Therefore, Rogers has a strong reputation, which leads to
a good image for potential new investors, and customers; this will ensure the success of
launching a competitive service to Netflix.
SITUATION ANALYSIS - WEAKNESSES
Looking at the weaknesses that Rogers has in comparison to Netflix, Netflix has much
greater numbers regionally in the United States and Canada than Rogers has for these two
countries. The vast difference in these regional numbers demonstrates that Netflix is
significantly more popular than Rogers between these two countries. Rogers is originally a
Canadian company, however they are present in the United States. Netflix is originally an
American company but it is also present in Canada. Looking at the regional information for
each company, which was provided by Factiva, Rogers has a much lower regional standing
in the United States than Netflix has in Canada. This is a weakness for Rogers because it
demonstrates their potential inability to allocate more regional coverage and their inability to
gain brand recognition throughout the United States. Without this regional coverage and
brand recognition while Netflix is already so popular amongst these two countries, it will be
much more difficult for Rogers to be successful.
Although Rogers' total revenues are more than those of Netflix, they have only
increased marginally, while Netflix's revenues have increased drastically. According to the
Market Line Company Profiles of Rogers published on October 30th 2013 and Netflix
published on Jan 4th 2013, "The Rogers cable division recorded revenues of C$3, 358.7

million in FY2012, an increase of 1.5% over FY2011" (Rogers Communications, Inc., 2013, p.
22). Although the dollar amount is greater than that of Netflix, "The company revenues of
$3,204.6 million during FY2011, an increase of 48.2% over FY2010". (Netflix, Inc., 2013, p.
16) The important factor here regarding the weakness of Rogers is their inability to compete
with the rate at which Netflix's profits and market are increasing. While Netflix is increasing
drastically, Rogers Aside from the cable division, "The Rogers Business Solution (RBS)
division recorded revenues of C$351.1 million in FY2012, a decrease of 13.3% compared to
FY2011" (Rogers Communications, Inc., 2013, p. 22). This demonstrates that Rogers'
weakness is not their amount of revenues; rather, it is their inability to produce a higher
increase in their cable revenues and maintain an increase rather than decrease in overall
revenues from the year-to-year basis as Netflix has done.
SITUATION ANALYSIS - OPPORTUNITIES
Given the climate of the external environment, Rogers has many opportunities in
regards to providing an online streaming service. With Canadian culture shifting to the
Internet for all things from entertainment to information, it is apparent that online streaming is
the next step in providing video content for Rogers. As stated by World Internet Statistics
(2012), North American Internet use has increased by 153.3% since the start of the
millennium, with approximately 79% of the population using it. Of the time they spend on the
internet 4.5% is dedicated to internet streaming alone, a small fraction of total use but overall
implies that consumers arent just surfing but are spending quality time watching videos while
online. Also this shift towards technology is apparent in upcoming generations. In a survey
done by Trend Hunter Inc. (2014), girls aged 6-12 said that 45% of their time on the Internet
is spent on YouTube, which is a video library containing everything from music videos to
tutorials. This was the most used site for this demographic showing that streaming videos is
already being integrated into the culture of some of the youngest people in the country.
Professor Michael Hulme of the Institute for Advanced Studies at Lancaster University
performed a study on the impacts of a digital era on 994 digital natives, people aged 16 to 24
where the internet is a natural space and is fully integrated into their lives. He concluded
that 75% of digital natives could not live without the internet, as well as 96% use multiple
media devices, whether a cell phone, tablet, laptop, or console, while using this internet

(Hulme, n.d). This illuminates the fact of technological dependency in young adults, much of
who possess the financial stability to have multiple devices all with the capability of streaming
media. This is a large portion of an emerging market, who will soon be choosing whether to
subscribe into a traditional cable provider or the alternative of streaming online either on free
websites or paid databases such as Netflix.
The main opportunity the market presents for Rogers is that the majority of customers
and consumers have not become cord cutters is because of the limited amount of live
content, specifically major sporting events, award shows and the news (Higginbotham, 2012).
While consumers are still reluctant to switch for these reasons, many sports networks are live
streaming their feeds on the internet for free, like CBC airing certain Sochi Olympic events
through their website. The technology is apparent and available, and soon if this continues
without intervention by a corporation the free supply will be able to fulfill the demand. It
should also be noted that eMarketer predicts advertisers will spend $3.8 billion on video ads;
8.94% of total advertising costs spent towards digital ads (Buckley, 2013). This
demonstrates that companies realize the shift in how consumers will see their
advertisements and are preparing for the most efficient way of gaining market share.
SITUATION ANALYSIS THREATS
Demonstrating the threats towards Rogers Communications Inc. will present an indepth analysis of external factors such as competition, government regulations and
consumer preferences. By launching an online streaming service, Rogers will face
competition from prominent services such as Netflix, Hulu, Amazon and Comcast. Netflix is
currently the worlds largest video streaming service, covering 33% of the market (Netflix
tops streaming market, 2012). To illustrate the impact of Netflixs market share, as
precedent, Blockbuster had launched an online streaming service under Dish Network corp.
to compete with Netflix, however the company was sacked by Netflixs rise in subscribers
over the past years (Blockbuster takes on stumbling Netflix, 2011). As consumers begin to
make the transition from cable TV, to online streaming services, the results are slow growth
in the market with increased competition. A major challenge stimulating this threat is the
growing numbers of Canadian subscribers to the American established company; which does
not financially contribute to the Canadian broadcasting system, and makes it difficult for

providers, such as Rogers to compete (Ladurantaye, 2013). Strategies of leading competitors

include cost of product differentiation and successfully creating a high brand recognition. To
reduce the impact the threat of competition has on the potential launch of an online
streaming service, Rogers Communications must heavily rely on product development
because of their competitive advantage being a strong broadcasting company and produce
an innovative service with a large emphasis on R&D. The culture of being innovative can
reduce the threat of competition as it creates a sustainable competitive advantage.
The broadcasting and telecommunications industry is regulated under the Canadian
Radio-Television and Telecommunications Commission. The CRTCs activities include
licensing, promoting compliance with regulations and encouraging competition within
telecommunications market (About the CRTC, 2014). Networks such as Netflix and Hulu,
unlike Rogers do not have to comply with the minimum requirements of Canadian
programming outlined by the CRTC. Therefore there is challenge in the unfair advantages
posed against Canadian broadcasting service that cannot meet the realities of the digital
world. According to a CBC publication, online broadcasters arent governed by the CRTC,
so have more freedom. (Payton, 2013). Thus presenting the challenge of the competitive
market under minimal regulations and policies.
Additional threats facing Rogers are consumers who are transcending to streaming
online. According to the CRTC, one third of Canadians watched television online in 2012,
with growing numbers in Canadians cutting the cord (Payton, 2013). While services such as
Netflix and Hulu are dominating the streaming market, many consumers are more likely to
continue online streaming offered at no costs. Consumers are dissatisfied with Rogers, Bell
and Telus services that regard their customers as individual transactions. Although many
consumers choose to stream online for free, a report from July 2013, suggested about 25
percent Anglophone Canadians had signed up for Netflix as their services offer simple
propositions with low prices and cancellation at any time (Lozinski, n.d.). The solution to
attract and retain customers to the Rogers online service is to offer promotions that balance
benefits to the customer and costs for Rogers, which will ultimately appeal to current and
new subscribers.

RECOMMENDATION
Based on the above SWOT analysis, Rogers should launch a digital streaming service,
under a separate brand identity with a focus on live events and the combined force of its
large database of Rogers on demand. Assuming Rogers will be offering a new product to its
existing customers, it is advised that the organization move forward with a product
development strategy, in order to capitalize strengths and opportunities, and reduce the
threats and weaknesses.
Rogers has stable financial support and a strong brand reputation, which will support
the launch of the new service by mitigating the risk that comes with product development.
The protection of these strengths enables the marketing and research and development
teams to efficiently reach the target market of young adults.
Rogers should start an online streaming service in Canada and once there is more
exposure, potentially expand into the United States. This revenue amount allows them to
have the funds required to create a separate brand identity, ensuring any possible negative
associations with the Rogers brand does not affect this new service.
Thirdly by putting a focus on live programming, such as sports, award shows and the
news, Rogers will be able to capture the focus of its potential cord cutters, as well as those
with other providers. This is the best way for Rogers to emerge and capitalize on the
weaknesses of both Netflix and Hulu, both of which do not provide this type of programming.
Finally, Rogers can reduce vulnerability to competition by improving on defensive
strategies. Product development can minimize the threat of competition, as Rogers has
successfully created a strong brand reputation that can produce an innovative service that
can increase their sustainable competitive advantage.
Therefore, Rogers Communication Incorporated can confidently advance to the next
phases of their decision and reclaim its dominance in the entertainment industry.
Appendix A: Tables
1. SWOT Table
Factor

Factor

Strengths
- Rogers has strong financial support

Weaknesses
-Rogers does not have as much regional

- Rogers has been around since 1960 and have

more experience and knowledge about the
industry than many competitors
- Rogers spent 2.98% of pre-tax profits ($70
million) in donations; shows corporate social
responsibility and strong reputation
- Spent $100 million in research for this new
Online streaming service; prepared to launch
new service
- Rogers has more than 20 well established
broadcast partners; strong resources and
partners
-Rogers on Demand (pre-recorded episodes
and movies); database needs to be updated
-Rogers is one of the top companies in Canada
with over 4 million TV subscribers

coverage as other companies do such as

Netflix
-Rogers year to year revenue increase
from 2011 to 2012 was drastically lower
than that of Netflix
-Rogers would have to create a new brand
and gain exposure for the new brand name
-Must be able to gain enough customers so
that the service is profitable rather than an
unprofitable expense

Opportunities
-Main reason customers have not cut the cord
yet is because of limited live television content
(sports and news)
-4.5% of global internet usage per month is
dedicated to streaming video
-75% of digital natives claim they could not live
without the internet
-96% of digital natives use multiple media
devices while using the internet
-eMarketer predicts advertisers will spend $3.8
billion on online video ads; 8.94% of total costs
spent on all digital ads
-There was a decrease of 2.13% of nationwide
cable television subscriptions
-A survey on girls age 6-12, found that 45% of
their time on the internet is spent on YouTube;
the most used site in this demographic
-A study conducted by the NDP group predicts
pay-tv cable bills will escalate to $200 by 2020
-According to NPD, 59% of people prefer having
one single provider, compared with 21% who
desired multiple providers
-The Convergence Consulting Group estimated
about 3.5% of the market has cut the cord

Threats
-Netflix covers more than 33% of the online
streaming market
-Technological advances such as the HDMI
cable, allow for consumers to stream online
directly to their television at no cost
-Consumers are dissatisfied with Rogers,
Bell and Telus services
-12.7% of Canadians currently do not
subscribe to pay a service
-Since July 2013, 25% of Anglophone
Canadians have signed up for Netflix
-Netflix offers simple propositions with low
prices and cancellation at any time
-Networks such as Hulu and Netflix do not
have to comply with Canadian
programming regulations outlined by the
CRTC
-Comcast poses a threat to the Canadian
telecommunications industry with potential
expansion

2. Prioritization Table
Low Impact

High Impact

High Probability -Rogers spent 2.98% of pre-tax

profits ($70 million) in donations;
shows corporate social
responsibility and strong reputation
-96% of digital natives use multiple
media devices while using the
internet
-A survey on girls age 6-12, found
that 45% of their time on the
internet is spent on YouTube; the
most used site in this demographic
-According to NPD, 59% of people
prefer having one single provider,
compared with 21% who desired
multiple providers
-Networks such as Hulu and Netflix
do not have to comply with
Canadian programming regulations
outlined by the CRTC

-Rogers has strong financial support

-Spent $100 million in research for
this new online streaming service;
prepared to launch new service
-Main reason customers have not
cut the cord yet is because of
limited live television content (sports
and news)
-eMarketer predicts advertisers will
spend $3.8 billion on online video
ads; 8.94% of total costs spent on
all digital ads
-Consumers are dissatisfied with
Rogers, Bell and Telus services
-Since July 2013, 25% of
Anglophone Canadians have signed
up for Netflix
-Netflix covers more than 33% of
the online streaming market

Low Probability

-Rogers has been around since

1960 and have more experience
and knowledge about the industry
than many competitors
-Netflix offers simple propositions
with low prices and cancellation at
any time
-Technological advances such as
the HDMI cable, allow for
consumers to stream online directly
to their television at no cost
-75% of digital natives claim they
could not live without the internet
-There was a decrease of 2.13% of
nationwide cable television
subscriptions
-A study conducted by the NDP
group predicts pay-tv cable bills will
escalate to $200 by 2020
-Rogers has more than 20 well
established broadcast partners;
strong resources and partners

-Rogers is one of the top

companies in Canada with over 4
million TV subscribers
-4.5% of global internet usage per
month is dedicated to streaming
video
-The Convergence Consulting
Group estimated about 3.5% of the
market has cut the cord
-Comcast poses a threat to the
Canadian telecommunications
industry with potential expansion
-12.7% of Canadians currently do
not subscribe to pay a service

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REFERENCES
Buckley, S. (2013). Advertisers see new opportunities in the video streaming market.
Newton: Questex Media Group LLC. Retrieved from
http://ezproxy.lib.ryerson.ca/login?url=http://search.proquest.com/docview/146740985
5?accountid=13631
Canadian Radio-Television and Telecommunications Canada. (n.d.). About the CRTC.
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Factiva. (2014, February 20). Rogers Communications Inc company snapshot. Retrieved
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Higginbotham, S. (2012, April 11). The Cable Industry Isnt Stupid, Right? Bloomberg
Businessweek. Retrieved from
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Ladurantaye, Steve. (2013, September 23). Netflixs popularity poses a challenge to CRTC.
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Lozinski, Peter. (n.d.). CRTC Struggling with online TV. Retrieved
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