Amazon loves LoveFilm (true)
Enough to buy out the company?
Amazon is mulling a £200 million bid for Lovefilm, the UK's answer to Netflix, the Sunday Times reports.
Techcrunch UK's Mike Butcher is sceptical - he reckons The Sunday Times is often used as a stalking horse to help investors achieve a "liquidity event" - i.e. cash in some or all of their shares.
Unlike Mike we cannot claim any inside knowledge, but an Amazon-Lovefilm tie-in makes sense to us, even if nothing is on the cards now.
First up, Lovefilm is running the slide rule over a stock market flotation - at a time when IPOs are unpopular.
Secondly, the act of preparing a flotation often smokes out a buyer - it is easier, cheaper and gives investers the chance to sell out in full.
Third, and this is crucial, Amazon is already Lovefilm's biggest shareholder,, with a 42 per cent stake, after reversing its European film rental operation into the company in 2008 and later buying out one of the VC backers.
Lovefilm has the customers - 1.4 million all told - that Amazon wants. And it does something that Amazon used to do and wants still to do.
Most Lovefilm customers rent their films by post, rather than by Internet or TV, and Techcrunch thinks that buying a" legacy physical operation" would be a distraction for Amazon.
We disagree: Amazon does physical distribution as good or better than anyone. It is also managing the transition to online - witness The Kindle - rather well. As an independent Lovefilm will struggle to convert all its customers to a world of media players and video on demand. It is simply too small to take on the internet giants. This makes it a perfect fit for Amazon.
COMMENTS
LOVEFilM versus Universal - will Amazon help matters?
What would interest me is where this would put LOVEFiLM and Universal Pictures UK who are currently in a disagreement over fees paid over rentals. It's got to the point that LOVEFiLM are not able to carry Universal's latest titles - they won't sell to LOVEFiLM at all. Blockbuster is unaffected (presumably they caved into Universal's demands).
With Amazon taking over - would Universal change it's stance? I noticed on my own blog several months ago that Universal were seemingly sniffing around to find out how people are reacting to the lack of titles on LOVEFiLM, possibly indicating a return to LF. But so far nothing has happened.
Curious to see how this plays out.
Uh Oh!
Lovefilm offers an excellent service at present, but if Amazon get their grubby mits on it then I suspect my 2 day turnaround for disks to be extended to a week.
That would annoy me loads.
CD MEH
I gave up on CD WOW a few years ago after they messed up on a few orders in a row. Once upon a time they were pretty good (prompt/cheap), though about the time they were being almost constantly fined for sourcing no-UK CDs etc then it all went a bit downhill. I use a combo of Play and Amazon to get stuff now.
Had a look at the LM offerings a year or so back when my girlfriend suggested it (though that would also involve dropping Sky and going Freeview) but the bang for buck didn't quite do it for me. So we stuck with Sky Movies, the odd DVD purchase and some other method of to-the-home film distribution that is popular on t'interwebs nowadays.
Order...
Order is not prescriptive on LF. LF does send TV series or boxsets in the right order, but if the discs are not available, it goes to the next set in your list/order. And if that means it's the next season, it is annoying but not the end of the world.
Netflix has the scale to be able to pull that off... And as for this so-called 'abysmal' service you talk about, I haven't had shoddy service from LF and I've been a customer of theirs since 2003. Granted, they ship scratched discs occasionally, but if it's really unplayable, you send it back and mark it as such and they'll send you a replacement immediately.
And LF can't really do anything about the abysmal service by Royal Mail. Whereas Netflix has warehouses all over the place, LF has one or two... and that still doesn't help when Royal Mail does a crap job with first class mail. And they are the only ones who are really allowed to deliver to homes direct...
When you run out of movies...
... You put your account into holiday mode for 3 months. :-)
I've done that several times in the last few years, especially when getting CSI was a PITA.
