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Netflix to compete with Amazon across the pond

Netflix to expand to the UK and Ireland. Is Spain next?

Financial trends and news by Faith Merino
October 24, 2011 | Comments
Short URL: http://vator.tv/n/2096

Later today, Netflix will be reporting its third quarter earnings and the world will see how well the company has fared despite its series of stumbles over the last several months.  However dismal the results may be, Netflix is perking up investors with some good news in advance: the company is officially expanding its digital streaming platform to the UK and Ireland in early 2012.

The move across the pond marks the latest in Netflix’s international expansion strategy, which most recently included a 43-country roll out in Latin America in September, starting with Brazil.  At that time, rumor held that Netflix was also planning a European launch in early 2012, specifically in the UK and Spain.

But Netflix won’t be venturing into uncharted digital territory.  It will be coming up against Amazon, which has been offering digital titles and DVD subscription rentals to users throughout the UK, Norway, Sweden, Denmark, and Germany since acquiring Lovefilm last January for £200 million ($317 million).  With 1.7 million users and over 70,000 titles, Lovefilm has been dubbed the “Netflix of Europe.”

Lovefilm reported revenues of £97.2 million in 2009, representing a 29% increase from 2008 when the company reported £73.1 million.  Amazon previously held a 42% stake in Lovefilm since 2008.

Can Netflix become the Netflix of Europe?  It’s certainly much larger than Lovefilm, boasting 25 million users throughout the U.S., Canada, and Latin America, and while it does not disclose the number of titles in its catalog, it definitely has the global brand recognition needed to put it on firm footing in the UK.

The company has been gaining and losing digital streaming partners this year.  While Starz—which currently supplies Netflix with over 1,000 titles and original series—announced last month that it will not be renewing its contract with Netflix in February 2012, Netflix has been able to line up some other big name partners, including Miramax for its Latin American rollout, Dreamworks, and others.  The company recently gained exclusive streaming rights to AMC’s record-breaking hit TV series “The Walking Dead” (zombies!).

No word yet on what kind of pricing packages Netflix will offer, but it will have to compete with Lovefilm, which offers unlimited streaming packages starting at £9.99 a month—similar to what Netflix used to offer before it raised its prices to $16 a month (which is roughly what £9.99 converts to).

 


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