Lovefilm heads off Netflix again with Universal deal

Again confirming its intention to spend aggressively on top-shelf streaming video content and head off Netflix’s (s NFLX) European expansion goals, Amazon’s (s AMZN) European streaming subsidiary Lovefilm today announced an exclusive multi-year licensing deal for Universal Pictures films.
The agreement with NBCUniversal International TV Distribution will stream films including Battleship, The Lorax, The Bourne Legacy and Safe House to Lovefilm’s two million European subscribers in the second pay TV window. The pact also ends a dispute between the two companies over DVD rental that dates back to 2009.
The second subscription pay-TV window resides fairly late in a film’s distribution cycle, coming several years after a movie leaves theaters. In the western European region where Lovefilm operates, BSkyB’s pay TV service Sky Movies has exclusive first-window rights to the films of all six Hollywood majors — Lovefilm ends up getting Universal movies about six months after Sky Movies gets done with them.
Still, second window or first, access to top-tier motion-picture content remains essential for over-the-top services like Lovefilm to grow their subscriber bases. And the Universal deal has significance in regard to Lovefilm’s competitive positioning to rival Netflix, which has signaled its intention to expand into western Europe beyond the UK and Ireland later in Q4 after expecting to return to profitability in Q2.
The question: With Lovefilm already having signed a number of key exclusive licensing deals to premiere content, what will be left for Netflix by the time it fully infiltrates the western European region?
Last year, for example, Lovefilm signed similar exclusive second-window licensing deals with Warner Bros. and Sony Pictures, now giving it access to content from half the of the major studios.
Also among major American content suppliers, Lovefilm signed an exclusive deal for Disney/ABC TV shows in Janaury.
Read a Morgan Stanley Research note to investors Wednesday:

“We continue to believe that Netflix will face a highly competitive environment overseas. The fact that consolidated profitability is weighing on international expansion only buys time for incumbent competitors to become more entrenched prior to Netflix’s arrival.”