Netflix will suit their name in UK: no DVD rental by post

NETFLIX, the US DVD rental giant, confirmed this week that they will expand to the UK in 2012.

But the long-rumoured the move across the pond might not be the threat to UK DVD rental services that we first thought.

Netflix will only be moving its streaming service over here, as much a threat to the big pay TV providers like Sky, SeeSaw and Virgin Media and online movie vendors like iTunes as it is to Lovefilm.

Wobbly

In fact, threat might be pushing it a bit.

Netflix is launching into a fiercely competitive UK market after a decidedly wobbly few months.

The business lost more than 800,000 subscribers in the US in the last quarter after fumbling an attempt to separate their streaming and DVD rental by post subscriptions.

Many customers were handed price hikes of more than 80% and were, understandably, apoplectic.

As a, much delayed, response to the outcry Netflix announced that they were planning to split the American business asunder altogether and re-name the DVD rental by post business Qwikster.

"Streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently and we need to let each grow and operate independently," CEO Reed Hastings wrote, explaining the plan.

That may be true but the plan was swiftly nixed by customers who weren't shy in pointing out that it was a solution for solutions sake.

Two weeks ago, Netflix abandoned the idea.

In that context, the business' acknowledgement that the UK market will be tough to crack in their announcement should be heeded doubly.

After their bad press, Netflix will need the "aggressively priced, compelling service" they promised shareholders to be more aggressive than ever.

And even if that goes to plan, they admitted, launching the UK business will cause them to make a global net loss over the next few years.

Here comes the future

As Lovefilm start planning their Netflix-beating strategy, other DVD rental services like Blockbuster and Cinema Paradiso will doubtless be breathing a sigh of relief that the business won't be encroaching on their territory.

A cautious sigh, though, since the fact that Netflix has chosen not to launch in their market is surely more than a near miss, it's a sign: here comes the future and it's not coming by post.

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