Film firms flex their muscles as US giant leaps pond

ONE is the home-grown DVD rental service, the other is an American media giant that made its way on to British shores for the first time this week.

Now UK customers have a choice for the first time to get their TV and films from either Amazon-owned Lovefilm – or Netflix, which already has more than 23 million subscribers across the Atlantic.

Lovefilm has already responded by dropping its prices and announcing two new streaming deals with major content providers.

But a month’s free trial and the lure of a mystical service that Brits have so far only heard tell of through American films could well prove to be an irresistible draw.

“I think there is definitely a kudos with Netflix – it is known as quite a cool brand,” says Josh Welensky, The Scotsman Magazine’s technology writer. “I think the main thing is that Netflix is known for its streaming – where people can watch films immediately – whereas Lovefilm’s streaming service still needs to be developed.”

But the deciding factor for consumers will lie in which service offers the films that most people want to watch. Individual negotiations between the firms and film and TV distributors mean that while one of the streaming services – Lovefilm – may, for example, offer the Twilight films, the other may not.

Netflix refuses to reveal the size of its back catalogue – saying only that it has more films available at the UK launch than it had when it began in the US five years ago, and admitting that it does not have the same number of films and TV shows available in Britain as it does for its US customers.

But while some new blockbuster films will be on Netflix within weeks – the company claims it rivals Sky’s Movie Channel for speed of distribution – a large number of films will not hit Netflix customers’ screens until they have been on general release for a year to 18 months.

“It is expensive,” admits Joris Evers, spokesman for the US firm. “There will be certain films which we choose to release as early as possible, but others will take longer.”

Amazon, which bought Lovefilm last year after owning a stake in the firm for some time, this week entered into two more TV streaming deals – with BBC Worldwide and ITV. It already has contracts with a range of production distributors – some on an exclusive basis – including Entertainment One, StudioCanal, Warner Bros, Sony and Disney.

However, the pair are not the only two players in the market.

Viewers can stream a range of TV and films through the BBC’s iPlayer and Channel Four’s 4OD service – while other competitors include BSkyB’s recordable Sky Plus service. In the US, it was rumoured this week that a new service, run by Microsoft, would be put on hold.

Netflix insists it does not regard Lovefilm as a rival.

“We see Lovefilm as very much a DVD-by-post service, which is starting to move into streaming, whereas we are an established streaming service,” says Mr Evers. “We feel what we offer is more like a channel – we see ourselves competing more with Sky Movies.”

Netflix was launched in 1997 as a postal DVD service and expanded to internet streaming in the later part of the last decade.

While Lovefilm is largely computer-based – although it has recently moved into platforms such as the iPad and the PS2 – Netflix’s unique selling point is that its service is available through a wide range of media – including smartphones.

In the US, a large number of people use the service as an extra on-demand TV channel, watching programmes through their TV sets. Electronics brand Samsung said this week that it had formed a partnership through its Smart TV App store with Netflix for its latest Smart TV. A day after Netflix’s official UK launch, internet streaming hardware firm Roku also made the move across the Atlantic. Its products give viewers access to streaming services directly through their TVs – including Netflix.

While Netflix may not see Lovefilm as a rival, the UK company – which in a very British way refuses to comment on specific competitors – has clearly made a move to hit back. In the same week that Netflix went live on British soil, Lovefilm announced it had reached two million subscribers – driven by a record number of sign-ups in the final three months of 2011. It also cut its prices for streaming-only packages to undercut its new rival by £1 – positioning itself as a direct competitor to Netflix’s £5.99-a-month service. It also plans to counter Netflix’s arrival with a new TV advertising campaign.

“Lovefilm has faced competition since the day it launched and always deals with it the same way: by focusing on the members, constantly innovating and offering the best possible service,” said a spokeswoman. “The UK film delivery market is one of the most competitive in the world, and Amazon’s Lovefilm is optimally placed to continue delivering a service people want across the formats they want.”