Video Island: Combining online technology with efficient distribution

If you haven't heard of Video Island yet, you soon will because in less than two years the group has built itself into the largest DVD rental operation in the world.

Combining cutting edge online technology with efficient distribution has been key to this success.

Video Island was set up in 2002 by technology expert Saul Klein, a man who had previously spent an extended period in the States building technology for a venture later purchased by MSN.

Klein says the idea came from realising that renting DVDs at conventional retail outlets was ‘very strange indeed. You purchase a product that you have to return – in person – which is always a drag. Moreover, choice is limited and you can also get fined. Now that’s weird shopping.’

With the help of two partners, £400,000 of their own money and great technological know-how, they got their venture off the ground. ‘We identified major high street brands that we knew could use the Video Island Platform and set about putting a clever distribution network in place’.

In September 2003 he raised £2.1 million from venture capitalists, including Atlas Ventures, following this up in June 2004 with a £6 million fundraising led by Cazenove. With this cash he merged with rival screenselect and since then ‘we have not really looked back. We have 26,000 DVDs for consumers to rent, deals with brands such as Tesco and Easyjet and we’re also targeting consumers direct.’

At present the company is renting 50,000 DVDs over the net each month, which it dispatches to customers within 24 hours. As you might expect, there is no fine for late returns. Klein hopes his venture will produce an operating profit next year.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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