Amazon.com has signed an agreement to acquire Lovefilm, a U.K.-based company that's considered a European equivalent to Netflix.
The online retail giant had owned a minority stake in Lovefilm since 2008 when the latter bought Amazon's DVD rental business, which covered the U.K. and Germany.
Fully acquiring Lovefilm is an interesting move for Amazon. The rental company is essentially Europe's answer to Netflix, offering DVD-by-mail rentals, as well as a streaming service available on PCs, the PlayStation 3, and some HDTVs. Lovefilm, which was founded in 2004, currently operates in the U.K., Germany, Sweden, Norway, and Denmark. The company states that it has over 70,000 titles available to its 1.6 million customers.
Amazon didn't say what it has planned for Lovefilm, but the acquisition will expand Amazon's video on demand service, which offers streaming or downloading of films in the U.S. Greg Greeley, Amazon's vice president of European retail, did take note of Lovefilm's streaming service in particular in the acquisition announcement.
The acquisition is expected to receive regulatory approval by the end of the first quarter. The acquisition's price tag was not released.
If nothing else, Amazon has good timing with this acquisition.
Netflix spokesman Steve Swasey told CBC last month that the company is planning to "continue our international expansion" in 2011. He also told CBC that Netflix will put "significant dollars" into the expansion.
Netflix's anticipated decision to expand into Europe is due mainly to its success in Canada, where it launched a streaming service in September. This was the company's first foray outside the U.S. Netflix CEO Reed Hastings said in its third-quarter earnings release that the launch of streaming in Canada "has provided us with with very encouraging signs regarding the potential for the Netflix service internationally."
So far, Netflix hasn't said when it will offer its streaming service to international markets.