July 19, 2010 / 8:00 PM / 7 years ago

Netflix to launch streaming video service in Canada

TORONTO (Reuters) - Netflix Inc said on Monday it will bring its streaming video subscription service to Canada this fall, competing against a growing crop of Canadian video services and retailers like Blockbuster Inc.

In Netflix’s first foray outside of the United States, members can watch unlimited movies and shows streamed instantly to their TV sets and computers for a monthly fee.

Steve Swasey, a Netflix spokesman, said the company was not ready to divulge details such as pricing, exact launch date, or whether the service will be available via gaming consoles like Microsoft’s Xbox.

U.S. membership costs $8.99 (C$9.44) a month for unlimited video streaming as well as home-delivery of DVD rentals, a service Swasey said was “highly unlikely” to be offered in Canada because of its focus on growth through Internet streaming.

Despite Netflix’s huge popularity and loyal following in the United States, Wedbush Securities Inc analyst Michael Pachter doubts it will pose an immediate threat to retailers like Blockbuster or other similar providers.

“Streaming-only is not a real substitute for rental of new releases,” said Pachter, noting that Netflix’s streaming content will likely include releases that are at least two to three years old.

Netflix and other online video providers in the United States have struggled in the past to obtain subscription rights for digital delivery from Hollywood studios, particularly for new films.

Swasey said Netflix is not announcing what titles it will make available in Canada yet.

Rogers Communications Inc offers an on-demand and video rental service via Rogers Cable and Rogers Plus, a nationwide video retailer. Its unlimited DVD home-delivery service starts from C$10.95 a month.

More expensive pay-per-view services from Rogers or Bell Canada offer new movies and shows at the same time they are released in the video store.

“STREAMING WILL BECOME MAINSTREAM”

“The future for Netflix is streaming everywhere. The DVD ultimately will go away,” Swasey said. Netflix currently offers over 120,000 DVD titles in the United States and ships about 2 million DVDs on a typical day.

“A lot of consumers still prefer DVDs, but that will peak in a couple of years and then descend in popularity and streaming will become mainstream,” he said.

Swasey said 55 percent of U.S. Netflix members use the streaming service in addition to the DVD rentals, but said the company does not release data on their streaming video service.

Pachter believes Netflix is likely not offering a DVD rental service because “it’s too much work” for the company to acquire separate rights for each movie in Canada.

Netflix has been negotiating for a long time to have streaming rights in both the United States and Canada, he said.

“Netflix will do fine for people who want an alternative,” said Pachter, “but they’re not going to get people to stop renting DVDs.”

The company, which has roughly 14 million subscribers, has flourished south of the border while rivals like Blockbuster have lost market share. Netflix’s aggressive strategy includes providing streamed movies and TV shows via devices such as video gaming consoles and more recently, Apple Inc’s iPad.

Blockbuster, a once-dominant U.S. video rental chain, operates over 450 stores across Canada but does not offer an on-demand or home-delivery rental services in Canada. It has been weighed down by over $900 million in total debt and struggling to avoid bankruptcy.

($1=$1.05 Canadian)

Reporting by Solarina Ho; Editing by Frank McGurty

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