Amazon wants to take LoveFilm to the movies

Talk of a £200m takeover - which could be helpful to LoveFilm as it faces up to a significant competitive threat...

by Emma Haslett
Last Updated: 20 Jan 2011
Amazon has reportedly made a £200m bid for LoveFilm. The US giant, which sells everything from books to CDs to electronics, is apparently interested in buying the online DVD rental company after it sold its European DVD rental business to LoveFilm in 2008. We can’t imagine the LoveFilm contingent will be too put out by the offer: the company has been considering an IPO but given the state of the markets at the moment, that might not be the wisest decision. Plus, being owned by Amazon might give it some real clout in the wider European market.
 
The report hasn’t been confirmed by either company, but a takeover wouldn’t come as a massive surprise: Amazon actually already owns 32% of LoveFilm. And with 1.4m members in the UK, Germany and Scandinavia and a catalogue of 67,000 DVDs and games, the latter hasn’t done too badly since its inception in 2002. It is apparently now back in the black, after recording a £1.2m loss in 2008.
 
LoveFilm seems to have been heading more and more toward the digital market over the last few months – into which Amazon has already made inroads, with its Kindle and, latterly, downloadable episodes of a few select TV shows. Back in August, LoveFilm made a deal with legendary Hollywood studio MGM that will allow all its customers to watch MGM films online, so we can see why it’s an attractive prospect. And earlier this month, it bought two new non-exec directors aboard, one of whom was Kristian Segerstråle, the former CEO of gaming company Playfish.
 
An acquisition by Amazon could also potentially give LoveFilm a stronger position in the European market. That may come in handy after Apple announced its US equivalent, Netflix, will launch as standard with the new Apple TV. It’s not clear whether that will be the case when Apple TV launches in the UK at the end of the month – but if it is, backing from a company of Amazon's size and weight will be no bad thing.

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