Last month, Theatre Passe Muraille outfitted audience members with headphones, paired each one with a dancer and sent them to the grounds of the Centre for Addiction and Mental Health on Queen Street West to watch choreography emerge to a soundtrack about mental illness and homelessness that only they could hear. Next month, it is producing a collaboratively created show by a group of actors who have spent a year riding Toronto cabs and attending licensing hearings to create a work about the taxi industry. And, in December, the theatre's holiday offering will be an in-house visit from its travelling ToyBox workshop in which children and adults get to experiment with film technology and building toys.

Visiting Passe Muraille's ever changing website these days, it can sometimes be difficult to ascertain whether this is a theatre or some kind of community outreach project.

For years, Torontonians have tended to lump together Passe Muraille, Factory Theatre and Tarragon Theatre, the three mid-sized companies all founded around 1970, housed in downtown venues and dedicated to new Canadian plays. But as theatres find it increasingly difficult to draw audiences, the three Toronto stalwarts are questioning their relationship with theatregoers and with each other. Should each one do more to distinguish itself from the others? Or should the threesome sail together in the belief that a rising tide lifts all boats?

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"What was clearest to me when I started at Theatre Passe Muraille was that for a healthy ecology we wanted three theatres that were clearly distinguished, and had robust, separate agendas," said Passe Muraille artistic director Andy McKim, who moved there from a job at the Tarragon in 2007. "With that, we will have a broader cross-section of work being done."

So, McKim took Passe Muraille's tradition of creating theatre collectively in the community, a history dating back to director Paul Thompson's famous Farm Show of 1972, and he moved it into the social media age. His theatre is increasingly a loose gathering of artists out researching their city, reporting on the results as they go, and staging something, somewhere, at the end.

Passe Muraille's is the most aggressive departure from the traditional theatre model of picking six or eights scripts, slotting them into a season and signing up as many subscribers as possible. But Factory and Tarragon are also soul searching.

At Factory, that quest has been particularly tense in recent months: The theatre all but collapsed under the threat of an artists' boycott after its board fired artistic director Ken Gass in a dispute over renovations. Three prominent playwrights – George F. Walker; Judith Thompson and Michel Marc Bouchard – all pulled their scripts from the 2012-2013 seasons. Factory is still scrambling to put together its current season.

Interestingly, in the debate over who owned the Factory vision – Gass, who founded the theatre in 1970 and returned to save it from bankruptcy in 1996, or the board he had assembled himself – it emerged that even Gass's closest associates were loyal to an institution that was bigger than one leader. Associate artists Nina Lee Aquino and Nigel Shawn Williams have stepped up to plate to make sure there is a 2012-2013 season, while the board launches a national search for an artistic director. Aquino and Williams will announce their remodelled season Tuesday, but everyone at the theatre makes it clear that this does not represent an artistic change.

"The mandate isn't changing, the vision for the company hasn't changed," said managing director Sara Meurling. "... I think there is a hunger for new Canadian work."

Tarragon Theatre has always believed that. Often described as the cradle of English Canadian drama, Tarragon shares Factory's commitment to new play development and, as the largest and most financially stable of the three, it might seem the institution that least needs to rethink its model. Nonetheless, its headquarters in the Annex, which recently hosted a neighbourhood clothing swap, is full of ideas about how theatre can reach audiences.

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"There needs to be a sense in our community that we are doing more than just putting on plays for a diminishing group of people, that we have a social purpose," said Gideon Arthurs, the theatre's new general manager, who concentrates on improving the audience's experience. "Tarragon has a door that opens right out onto the street. We make them laugh and cry and kick them out. We need to bring them back in, give them a glass of wine and send them home talking about it."

He also sees joint marketing for the theatre brand as the best strategy. "I am a band-together guy."

Of course, distinctive differences don't necessarily preclude joint efforts: Passe Muraille tries to ensure that two-thirds of the blog posts on its website feature other people's work because McKim argues that promoting other companies' shows raises everybody's boats.