By Steve Goldstein, MarketWatch
Demonstrating the competitive threat Netflix faces overseas, British broadcasters ITV and BBC said a streaming venture that would restrict the lion’s share of their programming to their own service will launch at the end of the year.
The venture, to be called BritBox, is set to launch in the U.K. in the fourth quarter of the year, according to a statement released by the companies on Friday. It’ll cost £5.99 ($7.50) per month, compared with £8.99 a month for a standard Netflix /zigman2/quotes/202353025/composite NFLX +2.19% subscription in the U.K. The venture will air programs recently broadcast on ITV and BBC including “Love Island” as well as older shows like “Gavin & Stacey” and “The Office.” The venture also will commission original programming.
ITV will own 90% of the venture, with the BBC holding 10%. The BBC will have the right to buy up to 25% of it, while ITV will be able to sell down part of its stake to third parties. ITV shares /zigman2/quotes/205378065/delayed UK:ITV +4.42% rose as much as 2.3% in London on Friday.
On a conference call, ITV CEO Carolyn McCall said it would take three to five years to be breakeven and indicated they were willing to spend significantly to build up the service.
The broadcasters are pitching the service more as a complement than a substitute for Netflix, and cited independent research showing 54% of U.K. Netflix subscribers saying they would subscribe to the service, mostly in addition to current subscriptions.
An ITV spokesman said the company has been quietly letting many of its 12-month rolling contracts with the likes of Netflix and Amazon /zigman2/quotes/210331248/composite AMZN +1.72% expire.
BritBox already operates in the U.S. and Canada as a streaming service, with over 600,000 subscribers.
In the second quarter, Netflix reported 2.8 million international subscribers, below the company guidance of 4.7 million. Netflix shares tumbled 10% on Thursday, and fell further on Friday as well.