Amazon has sold its UK and German DVD rental business to UK based Lovefilm International. As part of the deal, Amazon Europe will make an investment in LoveFilm to become its largest shareholder.
The move is one of the few times Amazon has divested itself of on of its business streams.
According to a Marketwatch report, LoveFilm will benefit from a multi-year marketing agreement with Amazon, including promotion on Amazon.co.uk and Amazon.de. The combined business will have 900,000 subscribers, of which 300,000 come from Amazon.
Investors in Lovefilm include Arts Alliance Media, Benchmark Capital, Esprit Capital Partners and Index Ventures.
The financial details of the deal were not disclosed.
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This is sad news for the UK rental industry. LoveFilm have significantly higher prices, and offer significantly lower value for money than the Amazonian equivalent service, with slower delivery, and a rather nasty policy of packing three dvds into one envelope, so you have to return movies in bulk, to lower the value of their ‘unlimited subscriptions’.
They also use paper sleeves for discs, rather than Amazon’s hard plastic cases, which tend to provide much more adequate protection.
In short, a disappointing announcement.
moving away from core business
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It makes sense its a better brand for rental, amazon equals buy and offering to rent dvds instead of selling them has to hit the buttom line.
Great - sold out to a company who places their adverts in motorway service station urinals!
I’ve been with Amazon since their rental start-up and have been very happy
with all aspects of their service. I am very disappointed with this news.
Lovefilm has its fair share of customer critics which suggests the the Company
are more interested in subscriber numbers than providing a satisfactory level of service with its existing customer base, regardless of the ‘churn’ rate.
I agree with Mark— very sad news.
Just had a chat with someone who works in financial sector. His take on this is that Lovefilm are driven by need to maximise subscribers and minimise operating costs so that at a point in the future the existing venture capitalist owners can either float the company or pass it on. Only time will tell.
This is awful news. For those in the US, there’s simply no netflix equivalent in the UK. Service is more expensive and BY FAR worse.
Example: in my 4 years with Netfilx I don’t remember not getting a DVD that wasn’t the first of my list ever. Amazingly, in the case of Lovefilm and Blockbuster UK it is **very** rare to get your first pick. Instead of a proper ranking, you have a list of top priority movies and the system is supposed to prioritise those for you, which also rarely happens. In short, you end up more often than not getting the worst movies in your list. The reaction is usually to not put in the list anything you absolutely do not want inmediately. Even then, if you reduce the list too much, you just don’t get sent any movies for a number of days.
I know that for a Netflix user this would be difficult to beleive, but it is real, unfortunately.
The only more or less bright spot is Amazon, which at least has a proper ranking and tend to send the top movies regularly. The service was much less value for money than Netflix and cumbersome to use, but passable.
And now this. Very dissapointing. I hope Netflix comes soon and sends all of those sub-par services out of business…