Amazon snaps up LoveFilm

Amazon is set to acquire the remaining shares in UK-based online video rental service LoveFilm, dubbed ‘the Netflix of Europe.’

Amazon, which already has a 42% stake in the company, has agreed to buy the rest of the streaming and DVD rental firm, which operates in the UK, Germany, Sweden, Norway and Denmark.

Amazon’s network of international online stores – on which video streaming is notably absent in Europe – will now be well-placed to attack the missing markets via LoveFilm’s service.

The acquisition, which was first rumoured in the UK press last autumn, is subject to regulatory approval, but the deal is expected to close by the end of the first quarter. Financial terms were undisclosed but a price tag of £200m (US$319.1m) has widely been reported.

“LoveFilm and Amazon have enjoyed a strong working relationship since LoveFilm acquired Amazon Europe’s DVD rental business in 2008, and we look forward to a productive and innovative future,” said Greg Greeley, Amazon’s VP of European retail.

Seven-year-old LoveFilm has been working to grow its footprint across Europe through new service launches and deals with platform operators such as Sony Computer Entertainment and Samsung. It now has around 1.6 million subscribers.

Last month it introduced an online streaming service in Germany and in October it became available through Sony’s PlayStation 3 games console. The service is also available through Samsung’s internet-connected TVs.

The company first launched an online player in the UK last March, and is expected to introduce similar services across its rental divisions in Norway, Sweden and Denmark soon, taking LoveFilm into direct competition with Swedish VoD service Voddler.

Simon Calver, the company’s CEO, said: “The deal is a winner for the members who love LoveFilm because of its value, choice, convenience and innovation in home entertainment. With Amazon’s unequivocal support we can significantly enhance our members’ experience across Europe.”

Meanwhile US video service Netflix is in the midst of swapping its DVD rental model in favour of online streaming late last year, and has also been looking to expand overseas.

Netflix CEO and co-founder Reed Hastings said the company had moved away from DVD rental during the third quarter of 2010 and its launch into Canada had provided “very encouraging signs regarding the potential for the service internationally.”