Deloitte Technology Fast 50: No. 5
LOVEFiLM has exhibited a growth rate of 5694 per cent over the last five years. The company claims to be Europe's fastest growing home entertainment portal, providing online DVD and games rental or retail, cinema tickets and listings, Video On Demand (VOD), exclusive video interviews, reviews and film clips.
LOVEFiLM was born out of the merger of Video Island and LOVEFiLM in 2006, and now has 1.25m subscribers in the UK, Germany, Sweden, Norway and Denmark. The business is responsible for around 20 per cent of DVD rentals in these regions collectively and 40 per cent of UK DVD rentals, which results in managing over one million DVD rentals per week.
Simon Calver, CEO, ascribes much of LOVEFiLM's success to the firm's technology platform, which has seen significant investment over recent years. A 'Watch Online' VOD service was launched in May, with now 2,500 titles, although Calver concedes that pure-play digital video is still a niche market. "Our annual revenue is on course to be around £97m and the vast majority of this is down to the physical DVD market. I don't see this changing for the next five to ten years. Digital video just isn't practical yet for everyone, the choice isn't available, and consumer inertia is also a huge factor. Our real strength lies in the hybrid model for the next few years – whichever way consumers want their film, we can provide it."
However, the company has plans to launch a streamed direct-to-TV service, with launch scheduled for 2010. "We've been investing significantly in our technology platform, and have some big-hitting products in the pipeline - it's going to be an interesting 12 months or so", said Calver.
The company employs a total of 430 people, primarily from its depot in Peterborough and including over 120 at its head office in London. Calver believes that further growth is on the cards: "We've only achieved four per cent market penetration in the UK so far, so there's plenty of opportunity there. Interestingly, in specific regional markets we see higher spikes of demand, such as London for instance, where we've managed eight per cent penetration from the same national campaigns. Our main priority for the future is to drive these penetration levels up aggressively."