TORONTO – Having 100% of the Canadian TV music channel market makes it very hard for Stingray Digital Group to grow domestically – so the company has been pursuing international expansion in a number of countries. The United States and Latin America are the top two markets in which the company would like to get a stronger foothold, according to company founder and CEO Eric Boyko.
During a presentation to BMO Capital Markets’ annual Telecommunications and Media investors conference Tuesday (the first conference Stingray has participated in since it went public in June), he said the U.S. is the number one market for growth. There is considerable opportunity south of the border, too. Over the next six to 18 months, music channel services with the broadcast distributors representing about 55 million subscribers will be up for contract renewal, said Boyko, noting that this includes DirectTV, Verizon, Cablevision and others.
“So a lot of changes [are happening] in the U.S., but for us again as an incumbent, it’s better when there’s changes because that’s when you can make deals,” he added.
The company sees Music Choice, the largest music channel provider Stateside as a potential merger partner or acquisition target.
Beyond the U.S. market, there is also considerable opportunity in Latin America. Countries such as Chile and Columbia are seeing 10% growth in subscriber additions per quarter and cable TV prices are increasing as well, meaning the per-subscriber rate Stingray can secure from the providers increases in lockstep.
Brazil is another market where the company could make more inroads. Stingray has a relatively small presence there, but because there are two or three smaller competitors, the chances of acquiring a company may be good. In addition, there is still room to add more channels to the dial.
As for European acquisitions, there is less growth potential, said Boyko, because there are a fair number of free channels and the pay TV market isn’t as developed on the other side of the Atlantic Ocean as it is in the Americas.
Excluding acquisitions, Stingray also has prospects for growth in the mobile market. “So what we’re doing is using our contract on the TV side to subsidize or help mobile contracts to get more reach and to increase our stickiness,” he explained. For example, the company has a mobile app to which more than 60,000 Videotron wireless customers subscribe. This means that Videotron will think twice before getting of the Stingray music channels “because we’ve got big usage on mobile,” said Boyko.
This may be a better near-term strategy for mobile, he noted, adding because at the outset a mobile Stingray service won’t be profitable but it generates extra reach. The company may pursue this type of approach in the future “but for now it’s really a region stickiness factor,” he added.
Stingray is introducing new products for mobile customers, too. Vibes is similar to Songza but where the latter has a playlist in a certain category of perhaps 60 songs, Vibes has a playlist of 400 to 600 songs. The company has launched more than 1,000 different Vibes – essentially genres of music – and has plans to increase that to 3,000. The service is available in Canada with launches coming to Latin America in January and Europe in March.
