Curtain rises on Netflix in the UK

US giant faces battle with LoveFilm and Sky as it tries to break into the competitive video streaming market. Gideon Spanier reports

The battle for online movies and TV on demand just got interesting. Netflix, the leading player in the US with 24 million subscribers, yesterday launched its new, £5.99-a-month streaming service for the UK and Ireland. Subscribers will get access to a raft of content, thanks to deals with Hollywood studios such as MGM, Miramax and Momentum as well as British TV providers such as the BBC, ITV and Channel 4. So viewers will be able to watch almost anything from Pirates of the Caribbean to The Inbetweeners.

Netflix is bidding to replicate its success in America, where it is listed on the Nasdaq with a stock market value of nearly $5bn (£3.24bn). But the UK market is highly competitive and, unlike in the US, it does not enjoy first-mover advantage. So Netflix is offering a free month's subscription to all UK users in an attempt to woo subscribers.

Reed Hastings, chief executive, who flew into London for the launch, claims he doesn't see LoveFilm, the established homegrown online player, as a rival. However, like the sharp-elbowed Silicon Valley veteran that he is, Mr Hastings then proceeds to spend much of this interview with The Independent knocking LoveFilm.

"A lot of people want to say this is all about LoveFilm versus Netflix," Mr Hastings says, sitting in a suite at the May Fair Hotel in London. "But LoveFilm is really a DVD-by-post company that has just started streaming. They and Netflix are competing with Sky Movies and Sky Atlantic."

He makes a fair point when he argues that Sky is a bigger competitor. It has 10 million UK customers and Mr Hastings estimates half are movie subscribers. In contrast, LoveFilm has just announced it has hit 2 million subscribers across Europe, mostly in the UK.

But the Netflix boss is being cheeky when he claims LoveFilm is just a "DVD-by-post company". LoveFilm has been offering online streaming since 2009, and has struck a string of well-publicised digital deals in recent months with studios and TV firms such as Sony, Warner Brothers and ITV. What's more, Mr Hastings, who co-founded Netflix in 1998, built his own business model as a DVD-by-post company.

He also makes no mention of the disaster that befell Netflix during summer 2010, when he tried to hike prices for online streaming and spin off the physical DVD rental business into a separate company, Qwikster. The share price halved as more than 800,000 Netflix subscribers quit.

But he is certainly right to suggest that the market for movies and TV is changing fast. "The era of broadcast TV is going to evolve to click-and-watch with the internet," he says.

Netflix is launching on a string of devices in the UK – from the internet-enabled smart TV sets and personal computers to smartphones, tablets and games consoles. A user can access Netflix through the web or via an app and can switch seamlessly between devices mid-programme. Content is personalised and there is a recommendation service.

Appropriately for the social age, subscribers don't even have to go through a lengthy enrolment process on the Netflix website. If they choose, they can log in with their Facebook details. This means that when a Netflix user watches a movie or TV show, it automatically alerts their Facebook friends, posting a message to their ticker feed on the right-hand of their Facebook page. A Netflix user can also see what their friends have been watching.

The UK may be a tough market for Netflix to crack but it has an impressive record. In the first half of 2011, it added 5 million susbcribers in north America. Mr Hastings declines to set any public targets for the UK.

There is no doubt that LoveFilm, which was bought by Amazon for around £200m last year, sees Netflix as a threat. The British firm chose to announce for the first time yesterday that it is launching a streaming-only service, priced at £4.99 a month – £1 cheaper than Netflix. Previously, LoveFilm only offered online streaming and the rental of physical DVDs together in a variety of bundled price packages.

Mr Hastings uses that as another opportunity to knock LoveFilm.

"They're just launching the £4.99 package today. It's not even on their website yet," he says, grabbing an iPad and pulling up the LoveFilm website.

LoveFilm insists that details of its £4.99 package are well displayed on its website.

BSkyB probably has less to fear from Netflix in the short term. Sky's premium subscribers typically pay £30-£40 a month for movies and sport, so Netflix would appear to be appealing to more cost-conscious consumers.

The movie studios are quietly very pleased at the rise of LoveFilm and the arrival of Netflix after years when Sky was practically the only game in town. The on-demand firms have been engaged in a bidding war for movie rights for exclusive time periods – known as the pay-TV window. Such investment is not cheap. Netflix has admitted to investors it could take as long as two years for its UK service to be profitable.

So the stakes are high as Netflix tries to conquer Britain.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
News
Buddy DeFranco
people
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
filmIdris Elba responds to James Bond rumours on Twitter
Arts and Entertainment
Lena Headey as Cersei Lannister in Game of Thrones
film
News
i100
Sport
Yaya Sanogo, Mats Hummels, Troy Deeney and Adnan Januzaj
footballMost Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: VP/SVP Credit Quant- NY- Investment Bank

Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...

Selby Jennings: Quantitative Research | Equity | New York

Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

Day In a Page

Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog
War with Isis: The West needs more than a White Knight

The West needs more than a White Knight

Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

'The day I was shot by the Taliban'

Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
Revealed: the best and worst airlines for delays

Revealed: the best and worst airlines for delays

Many flyers are failing to claim compensation to which they are entitled, a new survey has found
The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

The stories that defined 2014

From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

Disaster looming? Now you know where to head...

Which British city has become the first to be awarded special 'resilience' status by the UN?
Finally, a diet that works: Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced

Finally, a diet that works

Californian pastor's wildly popular Daniel Plan has seen his congregation greatly reduced
Say it with... lyrics: The power of song was never greater, according to our internet searches

Say it with... lyrics

The power of song was never greater, according to our internet searches
Professor Danielle George: On a mission to bring back the art of 'thinkering'

The joys of 'thinkering'

Professor Danielle George on why we have to nurture tomorrow's scientists today
Monique Roffey: The author on father figures, the nation's narcissism and New Year reflections

Monique Roffey interview

The author on father figures, the nation's narcissism and New Year reflections
Introducing my anti-heroes of 2014

Introducing my anti-heroes of 2014

Their outrageousness and originality makes the world a bit more interesting, says Ellen E Jones
DJ Taylor: Good taste? It's all a matter of timing...

Good taste? It's all a matter of timing...

It has been hard to form generally accepted cultural standards since the middle of the 19th century – and the disintegration is only going to accelerate, says DJ Taylor
Olivia Jacobs & Ben Caplan: 'Ben thought the play was called 'Christian Love'. It was 'Christie in Love' - about a necrophiliac serial killer'

How we met

Olivia Jacobs and Ben Caplan
Bill Granger recipes: Our chef's breakfasts will revitalise you in time for the New Year

Bill Granger's healthy breakfasts

Our chef's healthy recipes are perfect if you've overindulged during the festive season
Transfer guide: From Arsenal to West Ham - what does your club need in the January transfer window?

Who does your club need in the transfer window?

Most Premier League sides are after a striker, but here's a full run down of the ins and outs that could happen over the next month