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Summary:

After enduring a torrid few months, Netflix is hoping to get that it can generate some positive momentum by announcing plans to launch in the U.K. and Ireland early next year — its first product launch outside the Americas. But it will face stiff competition.

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After riding through a torrid few months with its on-off attempt to spin out its DVD rental business, Netflix is picking itself up off the floor with some good news for a change. In an announcement released Monday morning, the company said it was getting ready to launch a service in the U.K. and Ireland — its first outside the Americas.

Upon launch, Netflix members from the UK and Ireland will be able to instantly watch a wide array of TV shows and movies right on their TVs via a range of consumer electronics devices capable of streaming from Netflix, as well as on PCs, Macs and mobile tablets and phones.

Further, crucial, details have yet to be announced — prices, catalog and so forth. But it will be interesting to see where this goes: not least because the road is likely to be a little bumpier than Netflix is used to.

Unlike the U.S, Canada and other American markets, where Netflix was able to move into a leading spot pretty much without impediment, it seems unlikely the company will not be able steamroller its way into a dominant position in the U.K. and Ireland without resistance.

There is one main rival, Lovefilm, which started off as a copycat DVD rental service but has been moving to online distribution as a way to insulate itself from this incursion. The company, which was bought out at the start of this year by Amazon for a rumored $200 million, boasts 1.5 million users and a library of 67,000 titles. While it doesn’t have the same punch as Netflix, it is entrenched to some degree.

YouTube could be considered a competitor, too, especially since it has started offering a film rental service. Most broadband and cable providers offer serious TV and movie-on-demand packages, too, which are easier for existing users to sign up to and operate than a third-party services.

And then there’s Vdio, the secret new video streaming service from the founders of Skype and Rdio, which GigaOM’s Janko Roettgers uncovered last week. That’s due to launch, and you can bet that the founders will have learned plenty from the failure of their previous video business, Joost.

There’s another player that cannot be ignored, too, in the form of the BBC’s iPlayer. That massively popular service is largely used by people to watch TV from publicly-funded channels, so in theory it is much more like Hulu than Netflix. But while it doesn’t focus on showing movies online, it does have a hidden influence on the market because it’s free, funded by Britain’s TV license fee. It’s possible to argue that it has severe downward pressure on the pricing of the market, and perhaps one reason why Lovefilm’s British user base is proportionally smaller than Netflix’s. Certainly it sets a standard that Netflix will need to match.

Still, reactions in my Twitter steam suggested that there is still plenty of space for Netflix to wedge itself into the market. Lovefilm clearly has some weaknesses, including the breadth of its catalog, the availability of its streaming services and its customer service. Here are just some of them:

  • “This is great news. LoveFilm simply isn’t pushing aggressively enough here. We need competition in the UK to drive forward.” (@garethspence)
  • “Assuming Netflix don’t have same issue, if it’s competitively priced I’d move for access to Universal Pictures films alone” (@andybee)
  • “Welcome the competition, really – will hopefully improve things all round. Not loyal, @lovefilm cust service is atrocious.” (@jeremynicolas)
  • “Absolutely loyal to Lovefilm, it was a UK venture after all. WIll be interesting to see how Netflix create their position…. Top 3 reasons to love lovefilm: 1) Ease of Use 2) Growing Watch Online portfolio 3) Pester free subscription” (@mattbambow)

Reed Hastings and his team will no doubt be taking note of that reaction and hoping they can provide a broad package that appeals to customers.

And they’ll certainly be looking for some good news to cheer up investors who have watched the last couple of months with confusion: customers confused by a price hike, then angered by it, before the business apologized and announced its plans to separate the DVD and streaming business… which it then backtracked on, unceremoniously killing the scheme before it was even born.

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  1. Andrew Z Carpenter Monday, October 24, 2011

    “it seems unlikely the company will not be able steamroller its way into a dominant position” .. that’s not right.

  2. Interesting that there seems to be no mention here of blinkbox – a great online pay-as-you-go (with free content) streaming service recently bought by Tescos and growing in popularity as they forge deals with major players to have their app hard-wired into devices. Would be interested in your thoughts on blinkbox… :O)

  3. Good luck with streaming video in Ireland. Less than 20% of the population have access to broadband with an evening peak bitrate of more than 1 meg.

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