By Agency reporter

Friday, 21 Jan 2011

NEW YORK: American Internet retailer, Amazon, which already has a significant stake in the London-based Lovefilm company has taken over the remaining stakes in the DUD rental company. In a statement on Thursday, Amazon said Lovefilm had a “productive and innovative” future.

According to a British Broadcasting Corporation report on Thursday, the move is largely seen as a defensive ploy against a planned international expansion by United States video-streaming giant Netflix.

But Lovefilm Chief Executive, Mr. Simon Calver said the deal would help the company improve its online services.

“The deal is a winner for the members who love Lovefilm because of its value, choice, convenience and innovation in home entertainment,” Calver said in a statement.

“With Amazon’s unequivocal support we can significantly enhance our members’ experience across Europe,” he added.

Lovefilm, which began as a pure DVD rental company in 2002, has more than 1.4 million members around the United Kingdom as well as significant interests in Germany and Scandinavia.

For a monthly fee, subscribers can receive movies and TV shows through the post or watch them over a broadband internet connection.

Over the years the company has grown rapidly and increased its reach by acquiring rival services such as Screenselect and Video Island. In 2008, it bought Amazon’s fledgling DVD service; in return, the US retailer gained a significant stake in Lovefilm’s business.

The company has been adding more services, including games rental and, more recently, online streaming – but it has also run into trouble. A dispute with Universal Pictures blocked access to major films such as Bruno and Public Enemies.

In recent months insiders have made it known that senior executives and investors were agitating for a sale, with reports suggesting that negotiations between the two companies have been under way since last autumn.

The move could help guard against the possibility that US rival Netflix, which has more than 16 million subscribers, could invade the British market.

Last year Netflix – which has pioneered online video subscription – said that it was looking to expand internationally, and was believed to be targeting Europe.

“We’re now talking about other regions in the world,” a spokesman told the Canadian Broadcasting Corporation in December. “Based on the early success of Netflix Canada, we’re going to continue our international expansion next year and we’re going to allocate significant dollars to it,” the source said.

Investors in Lovefilm said the deal should be seen as a European success story.

“This is a great deal for Lovefilm and Amazon,” a partner at Balderton Capital, one of the company’s backers, Mr. Dharmash Mistry said.

“Lovefilm is the Netflix of Europe and it will be central to Amazon’s European and global strategy,” Mistry added.

Source: Punch