Amazon to Take on Netflix With Purchase of Lovefilm

The deal values the company at $318.6 million.


LONDON -- Is Amazon about to take on Netflix? The online retail giant has bought the remaining 58 percent of Lovefilm it does not already own. It acquired Lovefilm, the European mail and online movie rental business that is strikingly similar to Netflix, in a deal valuing the company at £200 million ($318.6 million).

The deal will enable Amazon and Lovefilm to work out how to improve online movie and game rental services across Europe, and help Lovefilm expand its mainly postal business. It could also help Amazon develop movie-streaming solutions that could be rolled out in the U.S.

Amazon acquired 42 percent of Lovefilm in 2008. The movie rental business now has 1.6 million subscribers and operations in the U.K., Germany, Sweden, Norway and Denmark and delivers movies by mail and online, via the Lovefilm Player, to PCs, Playstation and internet-ready TVs.

Lovefilm as expanded rapidly in the last few years, acquiring competitors including ScreenSelect and Video Island. Subscribers pay a flat monthly fee for unlimited rental TV shows, movies and games, which delivered revenues of £98 million ($156 million) to the business last year.

The company has deals with the majority of studios, but has been in dispute with Universal Pictures since 2009, blocking access to titles like Bruno, and Public Enemies.

"The deal is a winner for the members who love Lovefilm because of its value, choice, convenience and innovation in home entertainment," said Simon Calver, chief executive of Lovefilm International.

"With Amazon's unequivocal support we can significantly enhance our members' experience across Europe," he pledged.