As expected the arrival of Netflix to the UK movie subscription market is already causing significant changes to the industry. Having launched a month ago and made clear its intention to take on the likes of Lovefilm and Blockbuster it is clear that Netflix is keeping the established players on their toes. Netflix launched with an initially small selection in comparison with Lovefilm, with a selection of movies and deals in place with MGM, Lionsgate, BBC Worldwide and others. However it quickly became clear that the company intends to quickly increase the selection and the deals with other companies and to keep their prices competitive with the other companies.

Up until now, Lovefilm (owned by Amazon) have been the dominant player in the UK with their combination of a large selection of postal rented DVD’s and online streaming movies. As of today their online selection is still the largest and they offer a range of prices to suit different levels of movie watching. Other online streaming services such as Virgin, Sky and BT Vision tend to be supplementary to their main cable or satellite TV services, with Apple and iTunes being the other main player. However, as expected, Netflix are changing things.

Despite their initially small offering it is clear from their dominant position in the US that they will quickly be threatening the other services and it seems now that a price war is inevitable. Only this week, Blockbuster have jumped quickly into the online market, announcing deals in place with a number of large Hollywood studios, for the latest movies such as Drive, or Tinker Tailor, Soldier Spy Blockbuster are to offer exclusive movies, unavailable elsewhere for 2 weeks of rental through the Blockbuster site. Clearly Blockbuster have realised that their old model of town centre DVD rental is not on its own going to be a sustainable business model (with the popularity of online streaming and dvd duplication) and consequently have begun to play catch up with the likes of Lovefilm and Netflix. They will be offering these exclusive movie rentals for £2.99 per movie and they will be rented out for two weeks. Curiously they will be delivered on DVD rather than through the online model. People will order them online or through the retail stores and then they will be delivered by post. Blockbuster have yet to move to the streaming market.

One would expect that 2012 will see more and more competition in the streaming market as more and more people get faster broadband and purchase connected televisions. ANT digital TV specialist Simon Woodward noted of the upcoming year that:

“2012 looks like being a tipping point in the market for connected TV. Retailers and manufacturers have for some time been discussing the connected TV concept, but the benefits are still to be realized by a majority of UK consumers. 2012 will be the year that this changes – and we are predicting that a number of services will be launched in the coming months.”