Written by Ken Young, whose own blog is called The UK Mobile Report.
DVD rental company Lovefilm said Monday it’s buying Amazon.com Europe’s DVD rental business in the UK and Germany. Also under terms of the deal, Amazon Europe will become LoveFilm’s largest shareholder, with a roughly 30 percent stake that’s valued at between $120 million and $140 million, according to the Financial Times.
The move means LoveFilm’s share of the European market will rise to 3 percent with over 900,000 subscribers, 300,000 of them coming from Amazon. The new business will have subscribers in the UK, Germany and Scandinavia. Amazon will also promote LoveFilm services on its sites in the UK and Germany.
Lovefilm’s DVD rental business is similar to that of Netflix in the U.S., with no postage fees and no late fees. Such services have shown steady growth year-on-year, in stark comparison to the gradual decline of the high street video shop sector. LoveFilm also has a web site offering downloads, and has been something of a pioneer since being the first company worldwide to offer a film for download on the day of the DVD release of the film King Kong, in April 2006. Prices began at £2.99 ($5.90) per film.
LoveFilm now offers over 2,500 titles for download and has content partnerships with Warner Bros., Sony Pictures, Universal, Momentum, Icon, Tartan and Freemantle. In March it launched a download-to-burn feature that allows subscribers to burn direct to DVD.
All titles come with Dolby AC-3 Surround Sound and LoveFilm says special features will be added as and when they are made available by movie studios. The security system is provided via Flux-DVD and the discs are protected using SecureBurn technology preventing unauthorized copying of the DVD. Download time is approximately 30 to 90 minutes with the burning to DVD taking as long as the play time of the film, and prices start at £9.99 per film.
Which of LoveFilm’s services will emerge as the company’s main business remains to be seen. The DVD business is clearly under threat from digital downloads, and some analysts believe that the studios could go direct to customers or restrict sales to other download providers.