LoveFilm launched in early 2004 and in just five years has revolutionised the film rental market. The company pioneered an online DVD rental service, using the Royal Mail to deliver - it is now its biggest first-class customer - which left old-style rental shops reeling. It now has a vast library of 65,000 films, including everything from major new blockbusters to niche titles such as How to buy a Labrador and 90 Tai Chi DVDs.
The model was simple. Films are returned for free in the same bag they are sent out in, there is no late fee or fine (unlike with the shop model), no binding contract, and packages start at just £3.99 per month for two films.
"There simply isn't a catch with us," says Simon Morris, LoveFilm's chief marketing officer. "It's a simple, great idea that is on the side of the consumer. Our churn rate is really low, despite the fact that people can leave when they want, and our existing customers are our best advertisers."
In its brief history it has seen off all competition, with over 20 similar operators closing and even Amazon choosing to give up and invest in the company. "They realised they couldn't beat us so they joined us," says Morris, adding that LoveFilm now mails out a colossal 4m DVDs per month.
