Netflix to launch in UK after US woes

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NetflixOnline video rental service Netflix is to offer UK consumers the chance to stream tens of thousands of blockbuster films and TV series when it launches here in early 2012. Netflix has almost 24m users worldwide and is reported to be the biggest single source of web traffic in the US, accounting for almost a quarter of all web use. Its arrival will put it head to head with Amazon's Lovefilm service, and comes after a rocky quarter's trading in the US.

The move is part of an ambitious expansion programme which has seen the US company, which was founded in 1997, move into Canada and 43 countries in Latin America and the Caribbean over the last year. Netflix charges US users $7.99 (£5) a month to rent an unlimited number of films and TV shows to stream online.

Amazon's Lovefilm, which has 1.6m subscribers in the UK and Europe, charges between £4.99 and £19.39 a month depending on how many films users want to rent at the same time. YouTube, which is owned by Google, also launched a film rental service for UK users earlier this month.

Fox and CBS

Netflix has moved to compete directly with large TV networks such as Fox and CBS in the US by acquiring the rights to screen new content first, rather than simply making available material that has been shown elsewhere. That's prompted some broadcasters to raise the price of licensing deals with Netflix.

Earlier this month, plans to split the DVD-by-post and online streaming services into two separate companies were reversed after a consumer backlash over pricing. Netflix planned to charge $7.99 for each service, meaning customers who opted for both would be paying 60% more for the same service.

That lost Netflix 810,00 subscribers over the third quarter, taking the total figure down to 23.8m. The firm's chief executive and chief financial officer admitted "many of our long-term members felt shocked by the pricing changes, and more of them expressed that by cancelling than we expected."

It's been a bumpy ride for the company's share price this year, with $7bn wiped off the value of its shares since April, leaving its current market capitalisation at $5.7bn. Shares have dropped from a high of $300 to below $90.

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