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The DVD rental market in the UK is starting to consolidate ahead of the arrival of Netflix - the daddy of the business - from the US later this year.

This week two UK companies, Movietrak and Qflicks, announced they are to merge - and claim the deal makes them the UK's top DVD rental firm. Qflicks CEO Roy Gunter will be CEO of the new company.

Gunter said: "The online DVD rental sector in the UK is incredibly exciting and growing very quickly. Bringing these two successful companies together demonstrates our purpose, which is to be the number one player in the market."

The two companies will continue to trade under their own brands. Qflicks offers a subscription-based service, while Movietrak specialises in single DVD rentals. Both will use Qflicks' customised CRM system and customer portal. The chairman of the new company is Richard Brooke, previously group finance director at BSkyB.

Several UK companies, typically VC-backed, offer services based broadly on the business model pioneered by Netflix. They include Video Island, LoveFilm.com and Screen Select.

Customers pay a monthly subscription and are usually allowed three DVDs at any one time. Once they've watched a film they return it in a pre-paid envelope and receive another film by post. So you always have a choice of three films and you can keep them for as long as you like. Customers choose new films through a website.

Netflix was started in 1999 by Reed Hastings, who was inspired by his gym membership - a monthly fee for as much excercise you want. It claims 2m customers. ®

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