Summary:

Netflix (NSDQ: NFLX) executives launched the service in the UK and Ireland on Monday morning with pricepoints of £5.99 ($7.79) and €6.99…

Netflix
photo: AP Images

Netflix (NSDQ: NFLX) executives launched the service in the UK and Ireland on Monday morning with pricepoints of £5.99 ($7.79) and €6.99 ($8.89) for unlimited online movie and TV subscription streaming, forcing rival Lovefilm to to restructure and discount its digital pricing.

To coincide, Lovefilm spun out a £4.99-a-month streaming-only package, Lovefilm Instant, in December and started selling it in earnest Monday morning.

The company’s tariffs previously majored on DVD tiers, each including escalating streaming allowance. The equivalent to Netflix’s unlimited streaming had been priced £9.99, so Lovefilm has essentially halved the cost of streaming for Netflix’s arrival. This, however, is billed as a “special launch price”, suggesting it will rise.

[NB An earlier headline to this story claimed Netflix is "undercutting" Lovefilm. This was because Lovefilm's sign-up page, linked to from its homepage, did not yet refer to Lovefilm Instant, even a month after it launched.]

Lovefilm, further countering Netflix’s launch, says “hundreds of thousands” of customers now have access to Lovefilm Instant, following record Q4 sign-ups which took it to a total two million subscribers.

Typically, the UK rate of £5.99 ($9.23) is costlier than Netflix’s domestic $7.99 pricepoint.

Pricepoint isn’t everything in an arena dependent on content

  • Netflix says it has film and TV from All3Media, BBC Worldwide, CBS (NYSE: CBS), Channel 4′s 4oD, Disney (NYSE: DIS) UK & Ireland, ITV (LSE: ITV), Lionsgate (NYSE: LGF) UK, MGM, Miramax, Momentum Pictures, NBCUniversal (NSDQ: CMCSA), Paramount (NYSE: VIA), Sony (NYSE: SNE) Pictures Entertainment, Twentieth Century Fox (NSDQ: NWS) and Viacom International Media Networks.
  • In the pay-TV movie window, Sky Movies currently has exclusive deals with Hollywood’s six largest studios (Sony, Disney, 20th Century Fox, Paramount, Warner Bros. (NYSE: TWX) Universal) for linear and SVOD via subscription.
  • In the second pay-TV movie window, Lovefilm has exclusive deals with Sony Pictures and Warner Bros., as well as delas with Entertainment One, Studio Canal (formerly Optimum Releasing), Disney, Lionsgate and Momentum. In TV, Lovefilm just signed deals to add archive ITV and BBC Worldwide shows.

Netflix has expanded from the U.S. to Canada and many Latin American countries. With the UK and Ireland, it will put the brakes on international roll-out ambitions, conceding the significant costs of globalisation, plus the challenges faced by domestic customer reduction, will push the company to a loss through 2012.

Netflix’s Playstation service has gone live in the UK. The company has been inviting users to sign up for launch notification for a few months and will launch with a free trial.

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