Netflix, Lovefilm enter U.K. price war

LONDON -- Blighty's subscription VOD marketplace began to heat up on Monday as Netflix launched its streaming-only package for 5.99 ($9.25) in the U.K. and $8.91 in Ireland, coupled with a one-month free trial for all users to sweeten the deal. The launch, which is expected to be a costly and competitive one for the U.S.-based home entertainment service, prompted a price-cut from Amazon-owned Lovefilm, which has dominated the SVOD space in Blighty for years. Lovefilm will now offer unlimited streaming for just $7.71 per month. Both services have been adding to their product offer in the territory in the past six months, fiercely competing for content streaming deals. Since Netflix announced it would be launching in Blighty, Lovefilm has inked a number of expensive deals with indie distribs, including eOne and Studiocanal, which will see the service offer titles from both distribs -- including "The Twilight Saga" and "Tinker Tailor Soldier Spy," respectively -- exclusively during the pay TV window. Lovefilm, which already has two million subscribers, boasts a number of deals with content providers including Sony Pictures, Warner Bros. and recently, ITV and BBC Worldwide. Netflix has so far said it will offer subscribers in Blighty content from providers including the BBC, ITV, Channel 4, Disney, MGM, Miramax, Paramount and Sony Pictures. Additionally, Netflix has inked exclusive distrib deals with Momentum Pictures and Lionsgate U.K., although specifics of the deals have yet to be unveiled. The arrival of Netflix is a welcome one for content providers, specifically independent film distributors, as the service and Lovefilm have both been offering indies more lucrative options than dealing with pay TV operator BSkyB, which has traditionally offered indies much smaller deals -- if any -- than the Hollywood majors.But it looks set to be an uphill battle for Netflix: In late October, Netflix CEO Reed Hastings said in a letter to shareholders that the company "expect the costs of our entry into the U.K. and Ireland will push us to be unprofitable on a global basis; that is, domestic profits will not be large enough to both cover international investments and pay for global G&A (general and administrative costs), technology and development."After the company saw a sizeable customer exodus in the U.S. last year following its 60% price hike, Hastings said: "We are starting 2012 in the best possible way: By giving customers in the U.K. and Ireland an amazing entertainment experience."In preparation for the Netflix arrival, Lovefilm has plowed money into a large-scale marketing campaign in the territory, with glossy TV commercials and billboard ads. "Customers tell us they love Lovefilm because of the value, choice and innovation we offer in subscription film and TV entertainment," said Lovefilm CEO Simon Calver. "We offer customers an unparalleled range of titles." Contact Diana Lodderhose at diana.lodderhose@variety.com