Amazon is to purchase the subscription movie service Lovefilm, adding to the 42% shareholding it acquired following the 2008 purchase by Lovefilm of Amazon Europe’s DVD rental business, and shoring up Lovefilm’s defences against the US Netflix.
“The deal is a winner for the members who love Lovefilm because of its value, choice, convenience and innovation in home entertainment,” said Simon Calver, chief executive of Lovefilm International. “With Amazon’s unequivocal support we can significantly enhance our members’ experience across Europe.”
Lovefilm began as a movies-by-post service, but in recent months has progressively added online streaming to PCs, connected TVs and the PlayStation 3.
Simon Morris, Lovefilm’s chief marketing officer, told Broadband TV News the business models between online and physical media were still evolving. “Inevitably digital will phase out physical goods at some stage, but from our day-to-day-business that won’t be anytime soon. He added that it would be the customer who made the final decision. Typically customers would use both online and post to view their movies rather than one or the other.
Lovefilm operates in the UK, Germany, Sweden, Norway and Denmark with around 1.6 million regular customers of which 1.2 million in the UK.
In the United States the Amazon Unbox service was launched in 2006, working along similar lines and delivering online to Google TV, Panasonic, Roku, Samsung, Sony and TiVo devices. Amazon does not run the Unbox service in Europe and can now be expected to develop the European presence further, though retaining the Lovefilm name,
No financial details have been released on the acquisition, which is subject to the normal closing conditions and regulatory approvals. It is expected to close in the first quarter of 2011.