* Netflix launches at 5.99 pounds per month in UK
* Lovefilm offers new streaming service for 4.99 pounds
* Netflix shares up 2.4 pct; Amazon down 0.9 pct
(Adds shares, analyst comment)
By Georgina Prodhan and Matt Cowan
LONDON, Jan 9 U.S. online DVD rental
company Netflix (NFLX.O) launched in Britain and Ireland on
Monday, taking on BSkyB's BSY.L premium drama and movies
offerings and prompting Amazon-owned (AMZN.O) rival Lovefilm to
offer a new cut-price service.
In its first expansion outside the Americas, which the
company has said will push it into a loss this year, Netflix
said its prices and instant access to a broad range of online
entertainment would attract new customers.
Lovefilm, which has 2 million customers in its core British
market, immediately announced Lovefilm Instant -- an internet
streaming-only offer to undercut Netflix -- in addition to its
current offer that combines streaming and DVD rental by post.
Netflix shares rose 2.4 percent to $88.33 by 1516 GMT, while
the Nasdaq .IXIC was barely changed. Amazon shares fell 0.9
percent to $181.01.
"People are excited about the UK launch even though it had
been in the works for some time," said Daniel Ernst, of Hudson
Netflix Chief Executive Reed Hastings told Reuters in an
interview that BSkyB would be its main competition.
"Lovefilm is not the enemy. When you talk about big
entertainment businesses, Sky Atlantic and Sky Movies are huge,
and our advantage is we are much lower priced than the Sky
packages, and it is all on demand -- click and watch," he said.
Netflix is trying to recover from the roughest patch in its
history after alienating U.S. customers with a 60 percent price
rise in the third quarter in an attempt to cover the increasing
costs of buying TV and film content.
Co-founded by Hastings in 1997, Netflix created the U.S.
market for DVD rental by post but has suffered more recently as
it shifts to lower-margin instant online delivery.
Nonetheless, Hastings said Netflix had no option but to
press ahead aggressively with the new delivery technology,
describing DVD postal delivery as being "a little bit like
travelling by horse and buggy".
"In the long term, Internet TV -- the idea that you can
click and watch anything you want -- is such a powerful concept
that we are investing heavily," he said.
Hastings said Netflix had begun to regain U.S. subscribers
last quarter. "What we said a quarter ago was that it was going
to turn up in the back half of Q4, and everything has been
consistent with that," he said.
But he declined to say whether the company would turn
profitable again during the course of 2012. "I cannot comment,"
he said. "We are really focused on this global expansion and it
NO FRESH CAPITAL
Netflix is offering unlimited online access to tens of
thousands of hours of movies and drama for 5.99 pounds ($9.20)
per month in Britain and 6.99 euros ($8.90) in Ireland, plus a
month's free trial.
The new streaming-only package from Lovefilm, which said on
Monday it had had a record number of subscribers signing up in
the fourth quarter, will cost 4.99 pounds per month.
In the United States, cable and satellite TV providers are
under pressure from streaming services such as those provided by
Netflix, with many viewers giving up expensive subscriptions in
favour of Internet-based content streamed to their PC or TV.
But so-called over-the-top providers such as Netflix
struggle to compete with the quality of programmes provided by
Time Warner (TWX.N), CBS (CBS.N) and Viacom (VIAB.O). Netflix
has said its U.S. content costs will almost double this year.
Hastings said, however, he did not expect to need to raise
more capital this year, after raising $400 million in fresh
capital in November. "No. We are doing great," he said.
BSkyB charges 20 pounds per month for an entertainment
package that includes Sky Atlantic, a U.S.-focused drama channel
launched a year ago that includes exclusive rights to HBO's back
catalogue, including the popular Game of Thrones.
Europe's biggest satellite broadcaster demands that
customers sign up for contracts, and have a set-top box and
connection to a Sky dish. Sky Movies costs 16 pounds per month
on top of the basic TV package.
Both Netflix and Lovefilm can deliver their content via a
wide range of Internet-connected devices such as games consoles,
tablets and Blu-ray players as well as computers and smart TVs.
Netflix said its personalised interface, in which viewers
will be offered programmes depending on their past viewing and
can see what their friends like and are watching if they sign up
via Facebook, could help give it an edge.
It will offer films and TV programmes from such providers as
the British broadcasters BBC, Channel 4 and ITV (ITV.L) and
movie studios including Disney (DIS.N), Viacom-owned Paramount,
and Twentieth Century Fox (NWSA.O).
Hastings said Netflix, which until now has been available in
the United States, Canada and 43 countries and territories in
Latin America and the Caribbean, would not necessarily push into
more markets this year.
"I am not sure about this year. For now we are focused on
the UK and Ireland," he said.
($1 = 0.6490 British pounds)
($1 = 0.7865 euros)
(Additional reporting by Yinka Adegoke in New York; Editing by
Sarah Young and David Hulmes)
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