Despite crtc clearance for cable companies to start bringing the Sega video game channel into living rooms across the country, the service is being delayed as Sega of Canada and the cable suppliers iron out the business details.

crtc approval for licence amendment was granted Aug. 24 to 15 of the first companies to apply to carry the discretionary video game service. In a previous ruling in January, the commission had decided that no licence was required for cable video game services and that existing companies could apply for licence amendment.

The ruling also stipulated that a video game service must be 80% Canadian owned, which forms part of the administrative situation that is keeping the Sega channel out of hot little hands across the country.

According to John Gill, director of business development for Sega of Canada, an American-owned company, the channel may be sold to a third party and details of that arrangement have not been finalized. There are different ownership scenarios being discussed; one has one or more cable companies forming an entity to distribute the channel in Canada.

Conspicuous by their absence from the list of applicants for the video channel were Rogers Cable and Shaw Cable, which together account for over 60% of Canada’s 7.2 million cable subscribers.

Ken Stein, vp of regulatory affairs at Shaw Cable would not comment except to say that the company is in talks with Sega about how it would carry the service.

Phil Lind, vice-chairman of Rogers Cable, says the company is currently talking to Sega and hopes to launch the service by Christmas.

While September was the launch date most had anticipated, Christmas is now the target for most of the approved companies.

‘It’s now in the hands of Sega,’ says Bill Custers, vp of Western Co-Axial cable service, one of the companies approved to amend its licence. ‘There are ownership issues to be resolved. We have the hardware installed and are testing it in our office now. We’re chomping at the bit.’

Custers estimates roughly 4% penetration of the channel among the company’s 45,000 subscribers.

Dean MacDonald, vp and coo of Cable Atlantic in Newfoundland, says there are still a number of companies negotiating with Sega in terms of what their business relationship is going to be.

Conditions of licence amendment stipulate that the service carry only games and instructional information, and that any advertising content must be self-promotional. The service must also comply with crtc codes concerning sex-role portrayal, violence and advertising to children, and must consist of 10% Canadian content in the games offered.

Subscribers would be required to buy or rent the adapters from their cable provider to interface with the cable signal and their home Sega Genesis unit. The channel offers a choice of 50 games of various types each month at a cost that will likely be between $15 and $20. The revenue split between Sega and the cable companies providing the service has not been disclosed.

According to Alex MacLellan, executive vp and cfo of Fundy Cable, roughly 1% of Fundy’s 185,000 subscribers will sign on to the Sega channel initially, with growth forecast to 5%.

The service is currently on the air in St. John in Fundy employee homes and MacLellan reports positive reviews.

Mark Pezarro, vp of research and development and business development at Cogeco Cable, Montreal, anticipates 5% of the company’s 440,000 subscribers will pay for the channel over its first few years.