Market Insight

Lovefilm exits the Nordics

June 17, 2013

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Amazon-owned online rent-by-mail provider Lovefilm is to close its operations in Sweden, Denmark and Norway in August 2013. UK-based company have been present in the region since acquiring Boxman in 2005, a local rent-by-mail company, and has since grown by a series of mergers and acquisitions. In 2012, Lovefilm had a total of around 160,000 subscribers in the Nordics, Sweden being the largest of the three markets with some 100,000 subscribers. The company will now focus on its two core markets the UK and Germany where it boosts a combined 1.9m subscribers.

Move does not come as a surprise as Lovefilm have always been more focused on its UK and German core business. The Nordics only represents a small proportion of Lovefilm's overall business.

In contrast to its offering in the UK and Germany-which includes both physical disc rent-by-mail and digital streaming-in the three Nordic markets the subscription offer has been exclusively a physical disc-based service, although a limited digital streaming offer was added in 2010. While the logical step for Lovefilm would have been to expand its Nordic offer to include digital stand-alone offers like in the UK and Germany, it appears that Lovefilm has instead decided against investing into expansion in a crowded digital market that already includes a number of digital heavy-hitters including US rent-by-mail giant Netflix which launched across the region in October 2012 and local players such as SF Anytime and Viaplay.

Lovefilm has begun to occupy in the UK what it terms the 'second pay TV window', a lower-cost exclusive subscription window which follows the first window (typically controlled by the incumbent pay TV platforms); however in the Nordics, competition between pay TV platforms has already seen many of the rights in this window already acquired, preventing Lovefilm from taking the same strategy.

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