Internet film subscription service Netflix has confirmed it is to expand to the United Kingdom and Ireland in early 2012. Further details about the service, including pricing, content and supported devices, will be announced closer to launch.
Netflix has been streaming to US members since 2007, adding Canada in 2010 and 43 countries in Latin America and the Caribbean in September 2011.
In the UK, it will be in competition with existing digital pay-TV platforms Sky, Virgin Media and BT Vision, as well as Amazon-backed OTT movie service LOVEFiLM. In April 2011 supermarket group Tesco acquired Internet video streaming service blinkbox to boost its online entertainment offering, while fellow supermarket chain Sainsbury October 11 acquired Global Media Vault, a white-label digital entertainment distribution vendor to power its launch into online content retailing.
Online TV venture SeeSaw is struggling, having been sold by its owner, Arqiva, in July 2011, to Criterion Capital Partners, together with financial funds and Hollywood investors.
SeeSaw was born out of Project Kangaroo, a failed attempt by the BBC and other UK broadcasters to launch a Joint Venture for catch-up TV viewing. Kangaroo was found to be anti-competitive by UK regulators before it could even get off the ground, and Arqiva bought the project’s assets in 2009. Before the eventual sale, Arqiva had announced the closure of the service, saying it no longer fitted in with the company’s strategic direction “and requires considerable investment to succeed in an increasingly competitive market”.
It remains to be seen how successful Netflix will be against established DTH (Sky), cable (Virgin Media) and IPTV (BT Vision) players, with the Sky Go multi-device service already proving popular since its July launch. The presence of two established retail brands will also prove strong competition.
Nick Thomas, Principal Analyst for TV and Digital Media at Informa Telecoms and Media, described the UK market for paid video delivered via IP as “still essentially nascent”, suggesting that it was “no coincidence” that the two best-placed local players, LOVEFiLM and blinkbox, are backed by major retailers (Amazon and Tesco respectively).
“Does Netflix have the will, the funds, and the content to compete with them, and with Europe’s most successful pay-TV operator, BSkyB?,” he asks. “Netflix’s success in acquiring paying subscribers in the US is unarguable, but the UK will be a harder nut to crack,” he asserts.
“Netflix has been a great disrupter in the US market, shaking up a complacent industry through a smart focus on the customer experience (although that has been tarnished by recent events). But in the UK, local rivals will prove tougher competition in the near term, especially with BSkyB having a large audience of movie fans and a large library of US content, and with LOVEFiLM having more than one million subscribers to its DVD rental business. Netflix’s success in the UK will depend not on its reputation, but on its catalogue, and its ability to quickly get onto consumer-facing platforms, such as Virgin Media, the upcoming YouView, and games consoles,” he suggests.
“Netflix is very unlikely to dominate the UK market but it may shake it up. The endless wrangling and delays around the YouView platform contrast strikingly with Netflix’s rapid ascent and now its global rollout. In the short term, Netflix may be the catalyst that accelerates the rollout of IP-delivered premium content to UK audiences, but it may not itself be the main beneficiary of that trend,” he concludes.
Commenting on the news, Simon Woodward, CEO at digital TV specialist ANT, suggested that 2012 signified a “tipping point” for the Connected TV market. “Manufacturers and retailers have been talking about the Connected TV experience for some time, but in reality, the benefits are yet to be realised by the majority of consumers. 2012 is the year where this is set to change – and we’re expecting a host of services like this one to be launched in the coming twelve months as the market responds to growing consumer demand,” he said.
“As TV technology becomes more intelligent and more interactive, consumers are looking for services and applications that deliver opportunities to explore and discover richer content, while staying true to the traditional TV viewing experience. As consumers become more au fait with the potential of Connected TVs to enhance their experience, services like this are set to revolutionise the way we consume TV – an exciting time for both the industry and viewers alike,” he declared.