The move comes ahead of the UK launch of the US market leader Netflix. The merger will put ScreenSelect, which sends out 300,000 rental DVDs a month, ahead of Blockbuster's online offering in the UK.
's chief executive Saul Klein will take the same role at the merged company, with founders William Reeve and Alex Chesterman taking the roles of chief operating officer and chief commercial officer respectively.
ScreenSelect will become the consumer brand and website for subscribers, powered by Video Island, which will continue to operate as a white-label service.
Online DVD rental has taken off dramatically since ScreenSelect launched last September. Numerous companies have tried to grab a slice of market, which is expected to be worth £376m in the UK by 2006. According to research by Screen Digest, more than 1m households rent a DVD every week.
Klein said: "The combination of ScreenSelect's service and team, alongside Video Island's platform, studio relationships and venture capital backing, creates the number one in the UK market and accelerates our shared vision of expanding the market for online DVD rentals."
In January, ScreenSelect acquired rival company In-Movies. Last month two other players in the market, Movietrack and Qflicks, merged with the two brands remaining intact.
Despite the latest ScreenSelect merger Roy Gunter, CEO of Qflicks, says that that combined experience of Movietrack and Qflicks gives it an edge in the market.
"Qflicks is all about getting the customer experience right. We have the necessary experience to run a successful subscription-based service and have spent a lot of time developing a very solid technology platform to deal with the logistics behind the business. Our recent merger with Movietrak means we also have more than four years experience in the industry, which is longer than any other company," Gunter said.
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