Push into online streaming in the UK will not be the potion to cure giant’s ills

Steve Dinneen
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IT HAS been a year of two halves for Netflix. It reached a share high of almost $300 in July after a meteoric rise. Last year it accounted for more web traffic than any other site on the internet (that it deals in bandwidth-heavy streaming only makes this marginally less impressive).

But it decision to hike the price of movies hit sales and spooked investors, with its value decreasing 60 per cent since then. This was exacerbated by the disastrous announcement – and subsequent cancelling – of a spin-off of its DVD-postage arm.

It hopes a push into Latin America and Europe can turn around its fortunes – though as last night’s figures underline, it has its work cut out. It faces fierce competition with its UK venture. It arrives late into the online rental space, with LoveFilm, recently acquired and integrated into Amazon, already boasting more than 1.4m subscribers. Google has also announced plans to stream movies through YouTube and Apple offers a pay-per-view service through iTunes.

Last year 36 per cent of homes were pay-TV subscribers, with access to comparably priced subscription and pay-per-view models from BSkyB, Virgin Media or BT. Sky Go alone has 1.6m unique users a month. Netflix is understood to be in important talks about bringing the service to games consoles – but it will take more than that to topple the current hierarchy.