Netflix launches in UK, despite tough rival market

Summary:Netflix finally makes its way across the pond to UK and Ireland customers. But in an already established market, the company is not getting off to a healthy start.

Rejoice, media junkies. Internet film and television service Netflix has launched in the UK and Ireland.

Users are able to sign up via Facebook to a one-month free trial of the service, starting at £5.99 (€6.99 in Ireland), opening the doors to popular worldwide television and Hollywood films through mobile devices, games consoles and computers alike.

But as Netflix launches amid still ongoing post-Christmas sales, it will struggle at the hands of already established competitors in the market. Amazon-owned LoveFilm has over 2 million users across five countries in Europe, including the UK, while other broadcasters remain competitive with their own on-demand television services.

But Netflix is not a healthy company in its native U.S. market, where the service first rolled out.

Considering the company lost 61 percent of its market value last year after nearly a million customers bailed in one three-month period, the company's expansion could not come at a worse time.

Netflix has signed agreements with Disney, Paramount, Channel 4, Sony, Lionsgate, Miramax and many more. But rival LoveFilm prevailed by mirroring the success of many of its rival's content partners.

Most recently, LoveFilm struck back at a deal Netflix made by adding the same two major British broadcasters to its roster of available content.

While 2 million LoveFilm users is good for Amazon, the market is still nascent, giving Netflix an opportunity to fill a void in the slowly developing streaming service arena.

Netflix is holding mainland Europe at arms length as the UK and Ireland markets remain litmus test for a wider rollout. Netflix's chief executive Reed Hastings warned that profitability in the UK market could take more than two years, causing the company's shares plunging by 27 percent.

The first half of this year will be a crucial time for the UK and Ireland film and television-streaming sector. Though LoveFilm has held off most rivals, from Apple's iTunes to broadcaster's own on-demand services, Netflix could plug a vital hole in the market with greater availability of Hollywood and U.S. content from LoveFilm's often stagnant selection.

UK customers in particular will be spoilt for choice. But unless Netflix offers a drastic difference in service to cause customers of competing services to flow over the fold, it would not surprise many if Netflix's worst nightmare came true.

Image source: Flickr.

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Topics: Amazon, Apple

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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