DVD pair raise stakes in online market
Online DVD rental firms ScreenSelect and Video Island were today preparing to meet the challenge of US rivals after shaking hands on a merger.
The tie-up is designed to carve out a market leading position following Blockbuster’s entry to the online rental market and ahead of the arrival of Netflix later this year.
Companies are scrambling for a share of the DVD rental market which is predicted to be worth £376.1m (€558.3m) by 2006. The number of UK households with DVD players is expected to rise by 32% to 18.6 million by the same date.
In a joint statement, Video Island and ScreenSelect said they will ship more than 300,000 titles in September – the equivalent of 70 high street rental stores.
The London-based pair have set a target of trebling shipments over the next 12 months and are also considering plans to expand into Europe.
ScreenSelect offers films via its own branded website, while Video Island has built a rentals network involving firms such as Tesco, Comet and Toys’R’Us.
Film fans pay a monthly subscription to use the service and can hen rent as many films as they want – without the threat of late fees.
The new company will be called Video Island and will be headed by current chief executive Saul Klein, although both brands will be retained.
Mr Klein said: “We believe that the UK needs and wants an independent player, and not to have a US-based business dominating the market.”
He declined to put a value on the merged company, which is backed financially by private equity firms including Benchmark Capital and Cazenove.
ScreenSelect founders William Reeve and Alex Chesterman will stay with the company as chief operating officer and chief commercial officer.
Mr Reeve said: “The new business will boast the best of all worlds - partners, skills, backing, brand experience (and) an extremely sophisticated technology and operations platform.”
