French set top builder Netgem has bought Europe’s second largest online DVD rental firm, Glowria, for around €18 million ($25 million). Interestingly the reason for the deal is that Glowria has shifted from its initial online DVD rental roots to a web based video download and streaming service which offers around 3,000 film. Netgem wants to make the web video service plug straight into its IPTV set top, to bring VoD to its customers.
Interestingly Europe’s leading online DVD rental company is now branded as LoveFilm, and came out of a merger of the top three UK services under the original name of Video Island, which changed it name last year when it bought LiveFilm. It has its own VoD service, but like the inventor of the business in the US, Netflix, it operates it entirely as a premium for Online DVD service subscribers, and not as a separate service.
The deal was struck with the VC shareholders of Glowria including Seventure, Cr’dit Agricole Private Equity and Mousse Partners.
Joseph Haddad, CEO of Netgem, said, ‘It is clear that video on demand is taking off in France and that users are every day more inclined to purchase movies from their television set. By combining our set-top box with Glowria’s video service platform, we will be able to offer innovations to consumers in terms of interface and uses. This operation will allow us to reduce integration costs, improve our reactivity and offer subscribers greater security for their content.’
Glowria has acquired DiViDi and inVDeo in Germany and is one of the leaders in that market, which LoveFilm has focused mostly on Benelux and Scandinavia as it has spread across Europe. The deal will be paid for by an issue of new Netgem shares, issued at €3.50 each and leaving Glowria shareholders with just over 14% of Netgem’s capital.