Kate Bulkley, Media Analyst.

LoveFilm questions Netflix model

Conference Analysis By Kate Bulkley

IBC 2011

9 September 2011

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Leslie MacKenzie, Lovefilm, said

The impending battle in Europe between online video powerhouse Netflix - which recently announced its launch in Spain and the UK for 2012 - and UK-based Lovefilm, is shaping up to be a landgrab, but the Group Digital Officer of LoveFilm, Lesley MacKenzie, told IBC delegates yesterday that LoveFilm is taking a different approach to the Hollywood studios. This and the power of LoveFilm's owner Amazon give it a big advantage, he said.

"Netflix came to the UK a few years ago and left. So I think it comes down to who's got the brand, who's got the marketing and who's got the reach," said Mackenzie. "Netflix has been successful in America but it remains to be seen if it will be in Europe."

MacKenzie told the audience in the Forum panel on Reaching the Consumer Across Multiplatforms that LoveFilm has learned a lot from watching Netflix, which is having disputes with several studios over the licensing of current content, including with Starz, the maker of Spartacus. "We have the advantage of seeing Netflix grow in the States and so for our business we are working hand-in-hand with the studios," said MacKenzie. "We don't see ourselves as an OTT business, we are actually a broadcaster that is just broadcasting in a different way.

"Studios are only comfortable working with companies selling premium movies that are going to have premium subscriptions," said Mac Kenzie. "They don't like changing the distribution windows and they don't want to change how they get their money and they don't want to denigrate future windows. We are respecting that."

Getting content first is also important which is why MacKenzie has lined up a deal to put the Twilight vam pire films on Lovefilm in the UK before they are on a linear TV channel. Helge Hoibraaten, CEO of Vimond, an online video service provider part-funded by Norway's TV2, said that TV2's online video service had taken 10 years to get to 5% of TV2's revenues, but in the last 14 months that the number had doubled to 14%. "Other revenue has increased as well but not as fast as OTT," he said.

Hoibraaten said he is a "believer in OTT" because of falling costs and increasing capacity of broadband networks as well as the audience desire for greater freedom of choice, but the hurdles are also big, including a nascent business model, access to rights and the lack of a "great user experience".

Anthony Rose, CTO of zeebox, added that the industry should beware of setting standards like HbbTV, the European connected TV standard that combines broadcast and broadband TV services on connected TVs. "HbbTV has some nice sensible things like a browser but only the broadcaster can control it. I think that combining a standard with a power play for broadcasters is difficult because all the exciting innovation on user interfaces and other things will be happening on devices directly connected to the internet."

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