Former Lovefilm boss: Netflix could have stormed Europe years ago

Who’d be Reed Hastings right now? The embattled Netflix (s NFLX) boss has spent the last year watching his business take a hiding: careening from one disaster to another and watching the company’s stock price plummet by more than 75 percent in the past year.

Even the one supposed bright spot — the long-awaited expansion of Netflix services into Europe — has failed to offset the gloom: gaining a million new subscribers but costing $89 million in Q2 alone.

Things could have been very different, however.

Back in 2004, the company was on the verge of launching in the U.K. when it suddenly decided to pull out. The reason? A complicated competitive situation — primarily a local service called Lovefilm — and a huge spoiler from Amazon (s AMZN) which announced a British-focused video service. The combination sent it scarpering to prepare for an all-out war with Jeff Bezos: but had Hastings stuck the course, Netflix would probably be far and away the leader in this market today.

And that comes from somebody who should know: Lovefilm’s founding CEO, Adam Valkin.

Now a venture partner at Accel’s London office, Valkin hasn’t been involved directly with Lovefilm — which was bought by Amazon in 2011 — for five years. But he is certain that Netflix would have got the jump on the local market if it’d had the guts to launch back in the day.

“Netflix decided to come to the UK in 2004 — and honestly, if they came, I think it would have been a completely different story,” he told me.

“They decided the day before they launched to pull out, because Amazon had announced they were going to launch in the UK. So Netflix said ‘well, if Amazon are going to launch in the UK, they’re going to launch in the US, which means we’ve got to go back to the US and worry about the US and let them have the UK.'”

“We had to contend with Amazon, which was a tough company,” he said. “But it was one of 1,000 things they were doing — so we competed with Amazon really well, to the point when they actually sold us their competitor and they ultimately bought back the whole thing. But if Netflix had launched it would have been a different story.”

In the end it was another eight years before the company ventured across the Atlantic again, by which time the situation was very different. In fact, Lovefilm has proven so successful for Amazon that its London HQ is now going to be at the center of the Seattle-based company’s global media plans.

That announcement, one of a sequence of good news stories for startups in the British capital, shows how far the company has come in the intervening period.

“To me it is unbelievable,” he said. “I haggled to buy the domain name Lovefilm for $25,000 from a film production company that used it for surveys. When you deal with all of that stuff, when you have nothing, just an idea and a business plan… I’ve got to say, it does feel like quite a long time ago now.”