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U.K. Web Rentailers Merge

6 Apr, 2006 By: Jessica Wolf

Two online DVD rental companies in the United Kingdom have merged and are looking to the movie-download market.

Rivals Lovefilm.com and Video Island, which together represent about 15% of the U.K. video rental market, have agreed to a 50-50 merger and are expanding to offer movie downloads.

Lovefilm International is the London-based online DVD rental company that beginning April 10 will offer digital downloads for purchase of 35 top Universal Pictures movies, including King Kong.The two services merged in an effort to better compete in the United Kingdom and Europe against Blockbuster Online, Amazon and possibly Netflix, according to company executives.

The combined businesses, which will operate under the Lovefilm name, represent 400,000 subscribers and 17% of DVD rental transactions (about 2 million DVDs per month) in the U.K. They had combined revenues in 2005 of about $44 million.

Video Island CEO Simon Calver will retain the title at the new company, while Lovefilm CEO Mark Livingtone continues as a consultant.

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