Netflix to take on rivals with UK film push In the last six months of 2011, BSkyB made an operating profit of £601m on revenues of £3.36bn. Netflix, which charges £5.99 for unlimited access to its library via as many computers, consoles, smartphones and tablets as subscribers can muster, made £64.4m profit on sales of just over £1bn. Netflix executives admit they do not offer the latest blockbuster films and US TV shows that BSkyB has tied up, instead boasting of their investment in engineering to serve up highly personalised recommendations of older or more obscure content. Despite this apparent mismatch, Reed Hastings, the firm's CEO, has been talking up his desire for a "fair fight." Last month he even called for the Competition Commission to halt its four-year investigation into the broadcaster's exclusive "first window" movie deals with all six major Hollywood studios in light of Netflix's entry into the British market. He aims to wrestle away at least one of those deals within a year. His staff are up for it too; their new rival is the first topic of conversation with a British visitor and there is intense curiosity about the way this bright star - part owned by News Corporation - operates. As well as threatening a bidding war for movies, Netflix has also begun to attack the traditional pay-TV strongmen in American drama. Last year it beat HBO to fund David Fincher and Kevin Spacey's $100m remake of House of Cards, set in Washington DC. It will run on Netflix first later this year and is sure to generate interest among those who turn to Sky for their fix of Mad Men or Game of Thrones. A cursory glance might suggest the pair are not direct competitors. Sky viewers still do most of their viewing in the traditional, linear way - as laid out by the schedulers - despite the growth of Sky+ and its on-demand service Anytime. Netflix meanwhile is a purely on-demand service that relies on the internet to deliver entertainment. As well as Netflix, Sky faces challenges from the British streaming firms LoveFilm, owned by Amazon, and Blinkbox, owned by Tesco. Each offers a slightly different spin to "on-demand." LoveFilm is still closely associated with its postal DVD rental business, and Blinkbox offers online rentals on a pay-as-you-go rather than subscription basis. Sky executives privately concede that Netflix's subscription-only service, together with more than a decade of experience in the US, make it the strongest challenger. Both firms know their worlds are colliding. "The US is our most mature market, but still today almost all movie and television consumption in American homes is broadcast-based," says John Ciancutti, vice-president of engineering at Netflix. It's people watching live TV or its people using the hard drive on their DVR trying to make live TV feel like on-demand. But 10 years from today that will have reversed. It'll be almost all on-demand. The technologies that enable that are exploding. Broadband speeds are doubling about every 18 months on average. The other important technology is internet-connected screens. When we go to buy a television in a few years we won't be able to get one that's not internet-connected. When we turn those TVs on they'll look like our smartphones do now, with a bunch of apps. Virgin Media, BSkyB's traditional cable-based rival, has already indicated it would welcome Netflix and other content providers on to its new Tivo set-top boxes, effectively as an app. But BSkyB, which only this year announced it would allow the BBC iPlayer on to its system, is less keen to carve linear television's gravestone, pointing out that events such as sport and news are, by definition, regularly viewed live. Nevertheless, it is also preparing for a future in which viewers will expect to access most content whenever and wherever they want. "People will still want to enjoy the best TV out there, and on their own terms," says Luke Bradley Jones, Sky's director of new platforms. This means in addition to enjoying HD and 3D in the home, they'll continue to enjoy access on the move through internet connected devices and platforms. And although more TV will be watched on demand, scheduled TV will remain valued by viewers. Let's not forget that we're watching more live TV than ever and that's because lots of TV needs to be consumed live. This summer, Sky will introduce Now TV, an "over the top" internet streaming service, to make its movies, sport and shows available to those who don't subscribe to a pay-TV provider. It will be available as a monthly subscription with no contract lock-in and will operate as a separate brand from Sky. Jeremy Darroch, BSkyB's chief executive, emphasised Now TV would allow the firm to go after the 13 million homes that do not subscribe to Sky or Virgin Media. The new offer is also a significant acknowledgement of a future where viewers have more control and choice. "Sky will continue to have broad and varied competitors in the years ahead, ranging from other pay TV providers, new technology platforms, free TV, and, of course, other forms of entertainment," says Luke Bradley Jones. That's why we're focused on investing in the best content and the best technology. The pace of innovation at Sky has been relentless in recent years. As well as Now TV, it has developed Sky Go, which streams Sky channels live online for subscribers on the move, Anytime+, a much-expanded on-demand library, again for subscribers, and of course the Sky+ box, which, like Netflix, has spawned its own verb among devotees. All of these investments make it less likely that families will abandon their dish and monthly outlay of at least £20 per month in favour of streaming. But the battle has barely begun. "It's just better to watch what you want, when you want," says Ciancutti. This is the future of movie and television consumption.