Lovefilm Revenue Up In 2009 As Paying Customer Base Grew 29%

Vincent Teoh

Lovefilm, the UK-based company renowned for its online movie rental service, has experienced a rise in revenue and a drop in pre-tax losses in the year 2009, as revealed by annual financial statements filed at Companies House.

By the end of 2009, Lovefilm’s revenue increased from £73.1 million to £97.2 million compared to the year before. This 32.9% jump in revenue was largely fuelled by a 29% growth in the number of paying subscribers in the British, German and Scandinavian markets.

As a result, Lovefilm managed to reduce its pre-tax losses from a painful £7.4 million in 2008 to a more tolerable £934,000 in 2009. In the same year, operating profit on an adjusted basis rose from £3.5 million in 2008 to £8.9 million, and net debt dropped from £7.6 million in 2008 to £2.2 million.

Lovefilm’s chief executive officer (CEO) Simon Calver expects the company’s customer base to continue expanding in the year 2010, claiming that there is still ample room for growth given that Lovefilm’s market penetration in the UK stands at a rather meagre 4%. He hopes that Lovefilm’s TV commercials and word-of-mouth advertising will cultivate brand awareness and generate interest in the company’s services, ultimately resulting in a higher number of new sign-ups.

Lovefilm started life as a mail-order DVD rental company, and is currently the UK’s leading online film rental service on the back of a succession of mergers and acquisitions. The company also powers the backend for several other white label rental sites such as Tesco DVD Rental and WHSmith Movies Direct, making it the undisputed dominant force in the British online movie rental market.

However, seeking to satisfy an increasing number of viewers who wish to download and stream movies to their PCs or even directly on their HDTVs, Lovefilm has not only launched an online video-on-demand streaming service, but also partnered with TV makers Samsung and Sony to offer the service on their internet-enabled TV (IETV) models.

With the company’s movie streaming service scheduled to go live on the Sony Playstation 3 (PS3) next month, Mr Calver believes that the widespread availability of Lovefilm offerings across multiple platforms will stimulate further subscription growth.