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Streaming services such as CraveTV may be trapping the TV business in a dangerous cycle and threatening to sap profits.

CraveTV

Canadian video streaming services continue to come untethered from traditional television, as Bell Media said Monday that starting next year CraveTV will be offered directly to any Canadian with an Internet connection.

The young streaming service, which launched in December, is just the latest of several all-you-can-watch services to promise that consumers will be able to subscribe regardless of which company they choose as an Internet provider, or whether they pay for cable or satellite TV.

The announcement shows how quickly online streaming alternatives such as Netflix are changing the way viewers watch TV and movies. Competition for viewers has intensified not only from Netflix, but with the launch of Canadian alternatives such as CraveTV and Shomi, as well as new streaming services from major networks such as HBO and Showtime that are currently available only in the United States.

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In its first months, CraveTV stood out both for its low $4 monthly price tag and also because, unlike its main competitors, it was offered only to TV customers. But in recent months, it was increasingly isolated in its efforts to keep video streaming linked to television subscriptions, and will now open up the service starting Jan. 1, 2016.

"As our business model has continued to evolve, the time is right to also offer CraveTV as a standalone product," Mary Ann Turcke, president of Bell Media, said in a statement.

That appears to be a major shift in strategy. At the launch last December, Kevin Crull, who was then president of Bell Media, emphasized that CraveTV would be supporting TV's besieged business model, and "not bypassing the current ecosystem."

"The television that's on other streaming services, and that's on CraveTV … wouldn't exist if you didn't have the traditional TV system. So you really can't sustainably have one without the other," Mr. Crull said at the time. "And so, for that reason, we felt like we really needed to keep them linked."

But six weeks ago, Shomi co-owners Rogers Communications Inc. and Shaw Communications Inc. revealed that the $8.99-per-month service would be offered to any Canadian as a direct subscription, having launched in November in a "beta" phase that restricted its use to customers who had Internet or TV from one of the two companies.

The introduction in quick succession of U.S.-based streaming services by HBO and Showtime – both of which have content deals with Bell in Canada – as well as changes in the regulatory environment were all factors in Bell's decision, according to a spokesman.

"It's a rapidly changing part of the industry," said Scott Henderson, Bell Media's vice-president of communications. "There is a context happening here …determining the timeline for when these things happen."

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Mr. Henderson would not confirm whether the price for CraveTV will change when it is not combined with a TV package. "The pricing details are to be confirmed," he said. (Bell Media is owned by BCE Inc., which also owns 15 per cent of The Globe and Mail).

CraveTV and Shomi should soon be able to take advantage of a proposed new regime for video streaming services, which the Canadian Radio-television and Telecommunications Commission (CRTC) announced in March.

The new "hybrid" model, if finalized, would allow companies to offer video streaming services through television set-top boxes as a video-on-demand (or VOD) option, with much looser regulation than traditional TV operators face. As long as they also make the services available directly to customers over the Internet, they would be permitted to offer exclusive content and be exempt from making financial contributions to Canadian programming or Canadian content quotas.

Netflix operates under similar exemptions from regulation and the CRTC said the new model would "help to remove barriers for Canadian companies to compete on an equal footing in an on-demand environment."

The commission held a consultation this spring on the proposed new regulations but has yet to publish a final decision.

Consumer groups also filed complaints with the CRTC in February about both Shomi and CraveTV, arguing that the companies' initial attempts to tie the streaming services to TV or Internet subscriptions ran afoul of telecom and broadcast legislation, as well as CRTC rules.

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The CRTC "returned" those complaints in March, saying some of those concerns would be addressed when it announced the hybrid proposal. The Public Interest Advocacy Centre (PIAC) filed a new application against Shomi in June, but did not renew its complaint against CraveTV.

Telus Corp. and Eastlink intervened to argue that Rogers and Shaw gave themselves an unfair head start with Shomi and did not make serious efforts to negotiate distribution deals with other television providers.

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