Netflix touts success of UK and Ireland launch in Q1 report

Netflix touts success of UK and Ireland launch
Netflix well placed to battle LOVEFiLM and Sky

Netflix says the recent launch in the UK and Ireland has attracted subscribers faster than its expansions into other international territories.

In its Q1 2012 financial report (PDF), released today, the US giant says the launch contributed to three million new subscribers overall, around the world, bringing the total to 26 million.

The adoption in UK and Ireland during Q1 was more impressive than other launches in Canada and Latin America, but will take at least two years to become profitable, the company announced.

"The largest driver of growth in international members in Q1 was the launch of our service in the UK and Ireland at the beginning of January," Netflix said in a letter to shareholders.

"From the start, we achieved the highest net additions we've ever seen in the first 90 days of an international market launch."

Taking on Lovefilm and Sky

However, what British movie and TV fans really care about is whether the selection will continue to stand up against the other key competitors, Sky and Lovefilm?

Netflix says it is acquiring a greater percentage of the top box office movies in the UK than Lovefilm, while a forthcoming ruling on whether Sky Movies' dominance is against the spirit of competition could also help Netflix encroach on the satellite broadcaster.

"In the coming months, Netflix will be the Pay TV 1 UK home of 21 Jump Street and The Hobbit from MGM, The Woman in Black from Momentum and the recent monster hit Hunger Games from Lionsgate," it added.

"Collectively, our upcoming offerings account for 20 per cent of UK box office year to date, compared to our competitor Lovefilm, whose deals we estimate account for around 6 per cent.

"Without details on consumer pricing or content selection, it remains unclear whether Sky's Now TV will be a meaningful competitor. Ultimately, we believe we are well positioned to succeed in the UK and Ireland based on our content selection as well as our superior streaming technology.

"If the UK Competition Commission eventually forces Sky Movies to not control the Pay TV 1 output from all six major studios, that then may provide an opportunity for Netflix to bid earlier for major studio deals than otherwise would have been the case. It is premature to know how it will play out."

Return to profitability

Amid all of that good news Netflix is still in the red for Q1 2012, with a net loss of around of around $5m, mainly due to content acquisition, funding original shows and international expansion.

In the letter, signed by CEO Reed Hastings and CFO David Wells, the company added: "We've built an early lead in the global race to build the world's best Internet TV network.

"As we grow, we are trying to balance prudence and ambition while keeping a strong focus on member satisfaction. We work hard every day to make our service even better.

"Our rapid return to profitability, enabling further international expansion, is very gratifying."

After a rough 2011, it looks like Netflix is on track for a much brighter 2012.

Via: Engadget

Chris Smith

A technology journalist, writer and videographer of many magazines and websites including T3, Gadget Magazine and He specializes in applications for smartphones, tablets and handheld devices, with bylines also at The Guardian, WIRED, Trusted Reviews and Wareable. Chris is also the podcast host for The Liverpool Way. As well as tech and football, Chris is a pop-punk fan and enjoys the art of wrasslin'.