Netflix Inc. forecast it will attract millions of subscribers within a few years to the Internet film and television service it started in the U.K. and Ireland today, taking on Amazon Inc.’s Lovefilm.
The video-streaming service will offer films and TV programs such as “Top Gear” and “90210” from broadcasters and studios including Disney U.K. & Ireland, the BBC, CBS and Miramax, Netflix said in a statement today. The company expects to add millions of users with the offering, Chief Executive Officer Reed Hastings said in an interview.
Netflix has said it will lose money this year because of the U.K. expansion. It is competing for rights to shows with broadcasters who have their own Web services as well with other streaming companies, such as Lovefilm, and free services such as Channel 4’s 4oD and the BBC’s iPlayer. Lovefilm had about 900,000 users in early 2008 and now has more than 2 million subscribers in the U.K., Germany, Sweden, Denmark and Norway.
“It’s so easy to use Internet television, we’ve got great content and it’s a very low price,” Hastings said. “Sure 4oD is free, iPlayer is free, Lovefilm is just getting into streaming. There’re a lot of opportunities in the market.”
The service costs 5.99 pounds ($9.24) a month for unlimited video content in the U.K. and 6.99 euros ($8.91) in Ireland.
Lovefilm offers an unlimited film and TV streaming service for an introductory price of 4.99 pounds per month, it announced today in a statement.
The subscription TV market in Europe, Africa and the Middle East, including pay-TV, video-on-demand, mobile and video- streaming services as well as license fees, will expand 24 percent to $95 billion in the next four years, according to PricewaterhouseCoopers LLP. Internet-streamed videos are forecast to be the fastest growing segment.
Netflix’s early entry in U.S. market helped the Los Gatos, California-based company to become the biggest video-streaming service with more than 20 million members, spurring premium channels HBO and Showtime to offer shows online.
Still, the company has had to scale back its plans for Europe, putting plans to sell subscriptions to the rest of the region on hold as it works through a cash shortage. Hastings reiterated that Netflix is focused solely on expansion in the U.K. and Ireland and declined to comment on talks in the rest of Europe.
Netflix rose 8.8 percent to $86.29 in Nasdaq Stock Market trading on Jan. 6. The shares have declined more than 50 percent in New York in the 12 months before today.
Many of the company’s agreements with broadcasters in the U.K. have not been exclusive, meaning that competing services can offer customers the same shows and movies at the same time. Still, Hastings said that customers will be attracted to the breadth of content, which will expand as Netflix establishes itself in the U.K.
Customers can access Netflix through Internet-connected televisions, gaming consoles and on Apple Inc. and Android mobile devices, Netflix said.
Hastings scrambled to contain a subscriber revolt after the company attempted to spin off its DVD rental service into a separate business. Hastings abandoned the plan and the company lost 800,000 U.S. subscribers in the third quarter.
Lovefilm announced Jan. 6 that it had reached deals to show programs from U.K. companies ITV Plc and BBC Worldwide. Netflix, which announced a similar deal with the BBC last month, was in discussions with ITV for archived shows, a spokeswoman said last week.
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