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Lovefilm Germany Signs Disney for Digital Distribution, Expands to Sony Devices

June 23, 2011

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DVD rental service Lovefilm is ramping up its digital offer in Germany. The company has reached deals with Sony and Sony Computer Entertainment Europe (SCEE) to make the service available across the range of Sony devices including PlayStation3 games consoles, connected TVs, Blu-ray Disc players and home theatre systems. The announcements follow a PC version which launched in beta in December 2010.

Lovefilm has also expanded the selection of content on its bundled streaming service in Germany. The company extended its deal with Disney to distribute the studio's feature films outside the pay TV window both as part of Lovefilm's bundled streaming subscription offer and, for newer titles, on a PPV basis in Germany (the deal for distribution in the UK was signed in April this year).

Lovefilm is actively pursuing a similar strategy to that of its US counterpart Netflix. The company aims to evolve its business beyond physical disc rental but it is facing an uphill battle in securing rights to premium content for its bundled subscription service as most of the best rights are locked down by European Pay TV operators, who, unlike the US operators, put a lot of emphasis on directly securing premium movie and sports rights.

Connected devices are at the heart of Netflix Watch Instantly consumption growth and Lovefilm is also aggressively seeking deals with CE manufacturers. Last year the service launched its streaming product across the Sony device fleet and on Samsung Smart TVs in its home UK market. Its presence on PS3 is a particularly important step - at the moment penetration of connected TVs is still low across Western Europe in comparison to PS3, which naturally translates into higher consumption volumes on consoles compared to other connected devices. According to figures disclosed by the Dutch public broadcaster NOS in March 2011, PS3 users have initiated 300,000 video streams - about 3.5 times the amount of video requests from all connected TVs combined (NOS service is available on Philips, Sharp, Samsung and Sony connected TVs).

Incidentally, German broadcasters, heavily involved in HbbTV (the pan-European standards initiative for connected TVs) roll-outs, have not launched any of their online services on the PS3 which means that Lovefilm's service joins a very limited selection of video services currently available Sony's console in Germany - namely MUBI, Vidzone and Sony's native Qriocity service; by contrast in the UK the service is also competing for consumer attention against three of the four major broadcasters (BBC, ITV, Channel 4) who have made their free catch-up services available on the console.

It is of note that, unlike VuDu in the US, accessing Lovefilm requires users to first log into the PlayStation Network (PSN) - given recently exposed PSN security vulnerabilities, this presents a potential hindrance for the uptake of the Lovefilm PS3 service.
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