Some more detail appears to be emerging in the lead-up to Netflix (NSDQ: NFLX) launching in the UK next year: in the midst of signing a series of key content deals, the streaming service looks like it could also be missing out on some of the most popular local TV content.
Earlier this week, Netflix and the BBC announced that the service would feature several, but not necessarily all, popular programs from the broadcaster. The BBC would push episodes from current shows like Top Gear, but only six months after the programs were broadcast on the BBC itself. Other shows, like Fawlty Towers, are no longer in production and will probably see more flexible terms for the content.
Now it’s being reported that a deal with the UK’s biggest commercial broadcaster, ITV (LSE: ITV), may not include episodes of some of its most popular shows, such as the costume drama Downton Abbey, penned by Academy Award-winner Julian Fellowes. (To be clear, no deal between the two has been announced yet.)
An article in Bloomberg cites sources that paint a challenging picture for Netflix, whose entry into Europe comes as local broadcasters are establishing their own streaming services as a way of shoring up their traditional TV businesses.
These broadcasters will want to promote their own services first before passing their top content to third parties like Netflix. The pay TV market in Europe is currently worth some $76 billion, and PwC says it will grow to $95 billion in the next four years — although Netflix has not yet announced plans to offer content in other European markets beyond its launch for the UK and Ireland.
In addition to the BBC, Netflix has signed deals with MGM, Lionsgate (NYSE: LGF) and Miramax for films. Amazon-owned Lovefilm has managed to wrest Sony (NYSE: SNE) away for itself with its own exclusive deal.
In truth, it seems that Netflix’s dealings with European broadcasters are a very mixed bag. Beyond the BBC and possibly ITV, Mediaset in Italy seems open to collaboration, while RTL seems to only be interested if it can sell ads alongside whatever content it licenses.
That makes Europe not unlike Netflix’s situation in the U.S., where it looks like it will lose access to content from Starz and does not carry any from Time (NYSE: TWX) Warner’s TBS, but has forged deals with many of the main broadcasters for selected content.
Bloomberg reports that the company lost some 800,000 customers when it changed its pricing this year, but as of September still had 23.8 million subscribers and remains the biggest paid streaming property in the U.S. At peak times, Netflix can apparently account for 25 percent of all internet traffic in the U.S., according to network management firm Sandvine, cited by Bloomberg.
Correction: An earlier version of this report incorrectly referred to an article from Reuters; (NYSE: TRI) it was from Bloomberg.