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Canada poised for a raft of Netflix rivals

Peter Nowak
Are You Ready for the Great Netflix Instant Vanishing of 2013?

Canadians have proven to be pretty big fans of Netflix, with an estimated two million of them having flocked to the online video streaming service since its launch in 2010. Amassing that many customers in such a short time is nothing short of amazing, considering that Rogers Communications, Inc.– one of the largest traditional television providers in the country – has about that many cable subscribers despite having a head start of several decades.

Not surprisingly, the company – as well as every other big TV provider – is looking to counter Netflix’s explosive growth by fighting fire with fire. By this time next year, there could be a whole raft of Netflix competitors available in Canada, with each TV provider selling their own flavour of online streaming service to both current customers and non-subscribers alike.

Toronto-based Rogers says the key is a current dispute before the Canadian Radio-television and Telecommunications Commission between Quebec TV provider Videotron and Astral Media.

Videotron in February launched its own Netflix rival, Illico Club Unlimited, which offers an all-you-can-eat package of French movies and programming, along with some English content, for $9.99 a month. The service is available over the Internet but also through Videotron’s TV set-top box, in which case it comes over the company’s cable network and doesn’t use up customers’ monthly Internet data allotments.

Astral says this particular aspect of the service means it’s a direct competitor to its Super Ecran movie channel, which under CRTC rules is considered a “Category A” channel. Being classified as such means the channel gets genre protection, so no other direct competitors are allowed.

Videotron, for its part, says this is hypocritical because Bell – which is currently looking to merge with Astral – wants to do the exact same thing. The company announced its intentions to launch a similar Netflix rival last fall during CRTC hearings on the proposed merger.

Rogers, for its part, is raring to go, depending on how this Videotron-Astral dispute plays out. If the CRTC allows Videotron’s service to go over its set-top boxes, there will be a proliferation of Netflix competitors, says David Purdy, Rogers’ senior vice-president of content.

TV anywhere

The next six to 12 months will see an explosion of TV everywhere, or services that allow for the watching of shows and movies on any platform. “Canadians are going to be offered as good or better a TV ‘anywhere’ experience than anywhere else on the globe,” he says.

The set-top box issue is important, he adds, because it will allow TV providers to capitalize on their relationships with existing customers. That can counter Netflix’s edge, which is that it’s a global business that can bring its sheer size to bear in negotiating rights with TV and movie producers.

“It’s possible they could pressure the studios to throw Canada into a bigger global deal. That’ll be the tension point,” he says.

Canadian TV providers are also much better positioned to set up comprehensive competitors to Netflix because of their high level of vertical integration. With the likes of Rogers, Bell, Videotron and Shaw owning the pipes through which television is delivered as well as the broadcasters and channels that have the rights to the content itself, they are able to be more singular in their thinking.

“Broadcasters and distribution partners [in other countries] are having vigorous debates about how much is enough in terms of on-demand, online and mobile rights” for content, Purdy says. “I tend not to have that many debates with myself about whether or not having CityTV on demand is a good thing for customers and for the industry. I had that debate with myself and we decided it was a good idea.”