TRAILBLAZER: DVD on demand

Now you can rent DVD films online and just pop them in the post when you've watched them. Saul Klein talks to Charlotte Goddard about Video Island.

Entrepreneurs run in Saul Klein's family. His father, Robin, founded the Innovations Group. The younger Klein, who has launched online DVD rental service Video Island (www.videoisland.com) has an impeccable digital background. In 1994 he was involved in the launch of the Electronic Telegraph, before establishing Ogilvy & Mather's digital business. Later, as group programme manager at Microsoft, Klein looked after the company's personalisation and security tool, Passport, something which stands him in good stead now that he is running his own online business.

Subscribers to Video Island, which netted £2.1 million in first-round funding from venture capital firms Benchmark Capital and Index Ventures in September, pay a subscription to rent DVDs - £2.99 a week for two at any one time; £3.99 for three; £5.99 for five. "It's the ultimate DVD library," claims Klein. "Our members can rent every single DVD that has been made available in the UK, and new titles come out every week." There are no return dates or late fees. Subscribers can hold on to the DVDs for as long as they are members. They simply place their order through the web site, receive their DVD by post, and return it in a branded, pre-paid envelope.

Klein says that he was inspired by the success of the US DVD rental web site Netflix (www.netflix.com) to grab a share of the DVD rental market, which Entertainment UK predicts will increase to £400 million in 2005, from £65 million in 2001.

"We needed to have three areas of expertise to make Video Island work," explains Klein. "Internet expertise, which I have; multi-channel retail, which comes from my father, who is a strategic partner; and an insider's knowledge of the entertainment industry, which comes from the media and entertainment company Redbus, which is also a strategic partner," he adds.

As with Amazon, which can offer a wider range of books than it actually stocks because of its relationships with suppliers, not all DVDs are held in Video Island's warehouse, which operates a demand-driven supply chain.

"We have invested a lot of time and energy in the distribution side," points out Klein, who has a patent pending on Video Island's automated pick-and-pack system.

Personalisation is also important. The site uses collaborative filtering ("people who rented this DVD also rented ...") and favourites lists. "What I love about libraries is that you can see someone with a book and have a conversation with them. I wanted to get that social element in the online world," Klein explains.

Finally, why, when it rents out DVDs, is the company called Video Island?

"The official name for DVD is DVD video," says Klein. "Calling something DVD Island is like calling it 3G Island; it's a generic term. We want to create a brand with an emotional pull. And people still think of themselves as watching videos, even when the platform is DVD."

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