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Vidéotron to launch Netflix-like streaming service

Videotron Ltee Chief Executive Robert Depatie holds a mobile phone at a news conference to launch the company's wireless network in Montreal, September 9, 2010.


Vidéotron Ltée is saying non to Netflix Inc.'s Canadian ambitions.

The Montreal-based cable giant, owned by Quebecor Inc., plans to launch Illico Club Unlimited, a Netflix-like service that will offer hundreds of movies and television shows a month to its subscribers for just under $10. While several of Canada's cable and satellite companies allow subscribers to access content online, this service will be available to anyone with an Internet connection and will allow the Quebec company to compete for viewers outside its traditional markets for the first time – starting with Ontario, when it launches this weekend.

"We bought Canadian rights so we could go across Canada if there is demand," said Manon Brouillette, consumer market president at Vidéotron, adding that up to 10 per cent of the service's content could be in English. "Netflix was not a big threat at first but we've seen their percentage quietly growing and we decided we must do something or else the market would be open only to them."

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While the vast majority of Netflix content is offered in English only, the U.S.-based company signed a deal with Radio-Canada last year to offer more French-language content and said Thursday "it has made every effort to acquire Canadian titles that reflect the rich cultural, geographic and liguistic diversity of this country."

While Canada has not seen the same level of cord-cutting as the United States as viewers look for less-expensive ways to access content, cable and satellite companies are anxious to develop their own products that enhance their offerings. About 10 per cent of adult Canadians subscribe to Netflix, the Canadian Radio-television and Telecommunications Commissioner reported in September, and the number is expected to increase.

So far, however, that hasn't caused them to give up on traditional television packages. Those without the service watch roughly 16 hours of regular and Internet TV each week, while those with Netflix watch about 21 hours a week, including TV, Internet TV and more than five hours of Netflix programming.

One thing keeping Canadians tied to their cable and satellite companies are the data caps on their Internet connections – some viewers have found that their Internet bills increase prohibitively when they cancel their traditional television services and try to download all of their favourite shows and movies.

Vidéotron hopes to address this by introducing a flat-rate price for unlimited downloads – $10 a month for any customer with at least three services with the company (cable, cellphone and Internet) and $30 a month for those with fewer services. Any of its digital customers – there are about 1.4 million digital subscribers out of 1.8 million – who use one of their set-top boxes won't be charged for data when using the service.

The pricing for unlimited Internet is similar to that unveiled by BCE Inc. and Rogers Communications Inc. this month, with matching prices. The battle has driven down the cost of high-speed Internet services, at least in the short term; Rogers is offering the pricing only as part of a promotional package and would rather compete on performance than price.

"Customers have come to recognize Rogers has a vastly superior Internet offering," chief executive officer Nadir Mohamed said last week. "We've worked hard to improve the customer experience, we've removed traffic management processes and upspeeded our network. We will continue to play the Internet superiority card and play it aggressively."

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BCE also has its eye on a Netflix-like product. During hearings into its bid for Astral Media, the company said it wanted to create an online service that would compete with Netflix by offering subscribers the opportunity to view the company's content online. That plan was scuttled after the CRTC rejected the $3-billion merger, but could still be on the table when the company's new takeover plans are made public by the CRTC in the coming weeks.

The offering would have been available to all of the country's cable and satellite companies to offer to their customers, Bell said, and would be built around content inherited in the Astral deal from specialty channels such as HBO and The Movie Network.

"[It is] a made-in-Canada service, available in French and English everywhere we have rights to all Canadians through the cable, satellite or IPTV provider of their choice," BCE Inc. chief executive officer George Cope said at the hearings.

While alternative services seem to be complementing existing packages in Canada, there's a concern that won't always be the case. A survey released by Fusion Retail Analytics Thursday showed that 11 per cent of Canadians mainly watch television online – but that number jumps to 40 per cent for those aged 17 to 24.

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