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(Updates with Lovefilm statement in fourth paragraph.)
Oct. 5 (Bloomberg) -- Amazon.com Inc.’s European DVD rental and video-streaming service Lovefilm.com cut its long-term cash flow forecast for Northern Europe as the company failed to lure as many subscribers as initially planned.
Lovefilm which has been expanding into Norway, Denmark and Sweden, lowered its cash flow forecast for the region based on its five-year investment plan, the company said today in its annual report filed with Companies House in London. The company wrote down the value of the Nordic unit by 2.4 million pounds ($3.7 million).
Lovefilm, whose main markets are the U.K. and Germany, is competing in the Nordics with local rivals Voddler, whose investors include Finish mobile-phone maker Nokia Oyj, and Danish phone-company TDC A/S. Customer growth in the region “has not met management expectations,” Lovefilm said.
“The Nordic region represents a very small proportion of the overall customer base,” the company today said in an e- mailed statement. “We expect the Nordic region will continue to grow steadily but not at the same rate as the U.K. and Germany.”
Amazon, the largest online retailer, agreed to buy the remaining shares of Lovefilm in January for $320 million, to aid international expansion and compete with rivals including Netflix Inc. in the fast-growing video-streaming market.
The Seattle-based e-commerce company initially took a minority stake in Lovefilm after selling its DVD rental business in the U.K. and Germany to the private company in 2008. In the U.S., Amazon offers subscribers unlimited access to an online video library through its $79 Amazon Prime service.
Lovefilm’s net loss narrowed to 560,000 pounds in 2010 from a loss of 2.2 million pounds a year earlier as sales climbed 14 percent to 111.9 million pounds. The company had a total of 1.6 million subscribers at the end of December 2010.
--Editors: Simon Thiel, Kenneth Wong.
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