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27 January 2011

Marketing

British Business: Are We All Going to Sell Out?

If I was the director of a medium-sized business, and an enormous company offered me a huge amount of money to buy me out, I'd jump at the chance. The opportunity large companies can offer is huge. But with the current trend of big, predominantly US, corporations bailing out small - often British - recession-hit small businesses, is the future looking a little bleak for the British scene?

After reading an article on the BBC news website last week: 'Amazon Buys Remaining Stake in Lovefilm DVD Service', it appears that US retail giant Amazon has bought British business Lovefilm in a £200 million settlement which is seen by most as a defensive strategy.

Right now, Lovefilm has one major competitor - American internet streaming company Netflix, which streams films to customers across the US with a turnover of around $10billion.

Netflix pioneered the technology that allows customers to have all of the latest film releases sent directly to their laptop or internet capable television.

At the moment, Lovefilm is relatively small with 1.25 million customers, so it will inevitably be boosted by its new allegiance to Amazon, who is looking to enable Lovefilm to dominate the European market - something which Netflix has yet to achieve. So, good news all round?

Well, not quite. It would be good to hear about a totally British success story.

Lovefilm has demonstrated that it is a competent corporation. Maybe the muscle of Amazon was too appealing?

Lovefilm's Chief Executive, Simon Calver, has defended the deal and said it will improve the company's online service: "It's not about location. The big question is who is going to be the best partner to work with. There are few that offer the expertise that Amazon do, which is why it is perfect for Lovefilm."

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