Online DVD rental market, one of the fastest growing e-commerce sectors ever

64% of subscribers no longer rent from the high street

London, 8 February 2005: Video Island, the UK’s largest independent online DVD rental company, today announced figures, which underline the already massive impact online DVD rental has had on the overall DVD rental market. According to MRIB figures for 2004, Video Island, together with its consumer brand ScreenSelect and partners (Tesco, MSN, ITV) already account for a significant 3% of the total DVD rental market in the UK. This is the one of the fastest growth rates of any e-commerce sector.

This growth is substantiated by numerous factors. A recent national omnibus survey conducted for Video Island by Taylor Nelson Sofres, revealed that nearly 10m UK adults rent DVDs monthly, 24% rent 4 or more times a month, 36% two to three times and 39% once a month[2], showing the considerable opportunity available within the market. The TNS study also highlighted the fact that already 89%[3] of online homes have DVD players. Furthermore, research carried out by ScreenSelect amongst its users also discovered that 64% of subscribers no longer rent from the high street.

While subscription-based DVD rental has been highly successful in the US, the European market remains largely untapped, despite the increasing level of DVD player penetration. Research by Screen Digest estimates the DVD rental market is expected to be worth £388m by 2006, already 15.7m households own a DVD player and over 1 million of these households rent a DVD every week. In the broader marketplace, recent PWC[4] research underlines the growing importance of DVD as an entertainment format, with DVD representing an average 86% of all filmed entertainment spend compared to flat box office takings.

The figures speak for themselves. With the largest library in Europe, of 29,000 titles, Video Island rented nearly 3.5 million DVDs in 2004 alone, with well over one million rentals coming in the fourth quarter alone. Video Island is now renting almost 450,000 DVDs per month, which is the equivalent of 80 high street stores. Video Island expects these volumes to treble over the next year. In January 2005, Hitwise gave Video Island and its partner sites 31% market share of all visits in online DVD rental, making Video Island the largest independent business in the sector.

Saul Klein, CEO Video Island commented, “We have always believed that the selection, convenience and value-for-money of online DVD subscriptions will eclipse the traditional high street model and these figures clearly indicate we are well on the way. We are delighted that through our ScreenSelect brand as well as with our partners, including some of the largest UK brands such as Tesco, Boots, Comet, ITV and MSN, we are rapidly transforming the UK’s DVD rental market.”

Helen Davis Jayalath, senior analyst at Screen Digest commented, “According to Screen Digest research, the number of DVD rentals made by British consumers rose by 35% last year to almost 120m, valuing the market at £363m. It's clear that the online sector represents an increasingly important share of the rental business and that many consumers welcome the convenience of renting a wide range of titles from the comfort of their own homes."

[1] Source: MRIB

[2] Source: TNS Omnibus, Oct ‘04

[3] Source: TNS Omnibus, Jan ‘05

[4] Source: PWC Global Entertainment & Media Spend, 2004

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About Video Island

Video Island, launched in September 2003, is a company set to revolutionize the home entertainment market. Video Island delivers unlimited DVD subscription services to a mass-market, through both its own ScreenSelect brand, which is distributed by likes of Boots, Comet, Virgin Megastore, Top Up TV, Toys R Us, Dixons and Currys as well as by operating fully integrated DVD subscription services for some of the UK’s largest national brands such as Tesco, ITV, MSN and easyGroup.

Video Island offers Europe’s largest DVD selection of 29,000 titles, through a variety of different packages and price points starting as low as £7.97. The service has been awarded numerous 5 star ratings including the highest rated service from Computing Which? Magazine in January 2005. In fact 94% of subscribers have recommended the service to friends and collectively contributed nearly 3 million DVD ratings have rated nearly million DVDs and written nearly 100,000 customer reviews.

Video Island offers both the latest releases from the day that they come out for DVD rental, which means that someone looking for the latest box office hits is as well catered for as someone looking for TV shows, music or specialist art-house films.

Since launch, Video Island has raised nearly USD 20 million in venture capital and is backed by global venture capital firms Benchmark Capital, Index Ventures, and Cazenove Private Equity. / / /

Contact: Louise Ballard at Ballard Associates on 020 7727 1333 or 07974 333704

Published on: 12:00AM on 8th February 2005