LoveFilm signs BBC, ITV to compete with Netflix in UK

Krystal Peak · January 6, 2012 · Short URL:

U.K. video consumers are getting multiple options for streaming their favorite shows


Video subscription service have been quickly circling the globe in order to offer streaming content to people no matter where in the world they are. One European film subscription service, Lovefilm, has started 2012 by signing deals to give its members access to popular BBC and ITV television shows as of Friday.

This premium content deal come through just ahead of the soon expansion of Netflix to the UK and Ireland.

LoveFilm is an Amazon-owned company that already provides content from Disney, Lionsgate, Sony Pictures and Warner Bros.

BBC has had streaming agreements with Netflix for quite some time already but the addition of BBC and ITV to Lovefilm Instant is a huge TV get, for the service that is more movie-heavy. The Amazon subsidiary currently has available for its almost 2 million members and is the biggest provider of on-demand streaming video content in the U.K.

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.

Netflix, which has roughly 20 million streaming subscribers and expects the costs of its entry into Britain and Ireland to push the company further into a loss for this quarter.

Now serving 45 countries, Netflix Co-Founder and CEO Reed Hastings is hoping to regain control of the conversation about his company after it has struggled with bad sentiment over price hikes, losing content contract and attempting to spin off a DVD-by-mail-only service, Qwikster.

In 2011, Netflix added to its expansive variety of TV shows and movies in the United States, signing new multi-year agreements with CBS, Twentieth Century Fox, Lionsgate, Miramax, Open Road Films, NBCUniversal, Dreamworks Animation, MGM and the Disney-ABC Television Group among others.

Lovefilm services are competitively priced at $9.27 per month for a basic streaming package, compared to Netflix's $7.99. The services is also available for viewing on multiple devices, including computers, Internet-connected TVs, Sony's PlayStation 3, Apple's iPad and the Microsoft's Xbox 360.

Earlier this week, Netflix was clamoring for attention by releasing the trailer for its first original series. The first series to pop its head out of the abyss was 'Lilyhammer.' The first trailer for the fish-out-of-water show with the former 'The Sopranos' star Steven Van Zandt, debuted on YouTube and will start airing on Feb. 6 in the US, Canada and Latin America. The move, by Netflix to create original content has been a big differentiator for the company in the last few months, especially after loosing distribution rights from some movie hours, losing nearly a million users and seeing its stock suffer over the Qwikster attempt.

At the end of 2011, Citigroup survey looked at Netflix users since it hiked its rates and tried to spin off a separate DVD rental service and found that the percentage of people that were "extremely satisfied" with their Netflix subscription dropped drastically from 50% in May to 18% this month.

The percentage of people that were "very satisfied" did grow, however, from 33% to 39% -- which puts the people in the high-end of satisfaction down to 57% from 83% in May.

More than half of Netflix subscribers (54%) didn't change or adjust their service plans as a result of the price hike -- though 28% cancelled their DVD portion. 

The reception of these new shows will likely have a big impact on Netflix and will set up a model for future competitors that hope to just distribute content -- now they will have to think about whether they can create it too.

The Netflix stock (NASDAQ:NFLX) was up in the early hours of trading Friday near $86.

On the heels of this distribution announcement, Amazon's stock (NASDAQ:AMZN) has seen a 3% improvement -- bringing it up to $183.38.

In the coming months, we will see which company captures the U.K. audience with more fevor -- LoveFilm with the early start or Netflix with the brand recognition and, soon to come, original content.




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