I don't think multicast would work

Multicasting only helps with broadcast media - that is sending a single stream to multiple people /at the same time. Lovefilm customers watch films at any old time so the chances of being able to share a stream between multiple users is minimal.

I suppose you could cache the film at each exchange or POP but I don't think the gains would make it worthwhile.

Another option would be to allow us to download and watch at our leisure but I guess that would scare them even more.