Archive for July, 2000

BlackStar Festival Sponsorship

Friday, July 21st, 2000

BlackStar, the Uk’s premier on-line video store, has announced its sponsorship of the 54th Edinburgh Film Festival. The e-tailor is jointly sponsoring a Late Night Romps selection with movie magazine Empire, which includes the likes of the much touted horror triple, the Ring Trilogy, and Cut (from Australia), which stars Kylie Minogue. Sponsorship of the festival is just the latest in a string of promotional activities to raise the profile of BlackStar with consumers.

BlackStar: e-tail giant

Saturday, July 15th, 2000

Emerging UK e-tailer, the Belfast-based BlackStar, is proving that the internet is a busy place when it comes to selling video. Director and founder Jeremy Glover reveals the recipe for success.

Ask Jeremy Glover what makes his video e-tail business tick and you’ll soon be introduced to the concept of ‘passion pockets’. Passion pockets are extremely important to Glover and BlackStar, the expanding clicks and mortar company he founded back in 1998.

He believes that one of the strengths of an internet-based video sales operation is the ability to cater for shoppers’ niche needs. Therefore the ability to pinpoint people’s passion pockets is paramount. And with new shoppers signing on to the site at the rate of 15,000 per month, adding to an existing database of 120,000 paying customers and 300,000 pre-orders on the books at any given time, it would seem that BlackStar is getting it right. In fact, the e-tailer is so enthusiastic about catering for customers’ specific needs that it even offers a hunt service to track down rare items.

The first inklings of what would become BlackStar can be traced back to 1997 when Glover got talking with the two people who were to become his partners, Tony Bowden and Darryl Collins. “We all saw this internet thing happening and thought this is a great space to be in and we have to do something,” explains Glover. “As a frustrated actor, the idea of video shop really appealed to me. In early 1998 we were going round the investors in the City and no one knew about the internet space at all – it was pre the hype (and of course the crash) and it was very, very difficult to raise money. So we thought we would set up the business, show revenue coming in and prove it can be done.”

Glover was also attracted to a virtual video shop because – unlike with books and CDs – Britons weren’t buying from the US because of all the incompatibility between PAL and NTSC. With no investment forthcoming, Glover and and co decided to go it alone. The video shop was put together in just seven days and was up and running on March 8 1998.

Says Glover: “Tony programmed it, Darryl got hold of various wholesalers to set up accounts to source product and with my background as an advertising agency creative director I did a rough design. “We asked people right from the outset what they felt about the shop so a lot of the features in the store now were recommended by customers. It’s very much about feedback and contribution. We had 55 customers in our first month and 45 of them still shop with us.”

Glover is acutely aware that there remains within the video industry some fierce resistance to the concept of internet shopping. “I think at the top of these companies there is still a fear about the internet – will it destroy the industry?” Glover believes it will be rental video which is worst hit by upcoming downloadable formats and that the desire to own – bolstered by the burgeoning DVD market – will assure the good health of the retail industry.

Of DVD he says: “It’s digital, it lasts longer, it’s smaller, it’s more collectible and there are extras. We were aware of DVD from the start. We took the view that it wasn’t going to be another LaserDisc – a format that will come and go – and there was very much the sense that there was a parallel with the CD. And I think what’s happening on the hardware side – especially with PlayStation 2 – will really help and by the end of the year DVD is going to be really taking off. Last Christmas we were doubling DVD sales every month for four months on the trot. It’s very exciting for us.”

The original BlackStar site may have been a bit of a rush job but since then there has been plenty of time for refinement and a new design was launched only last month. “You’ve always got to keep on moving forward with an on-line store,” Glover explains. “You need to take it slowly but keep things fresh – keep it recognisable but advancing.” The designers have jettisoned the site’s muted blue and yellow colouring in favour of a clean black and white look: “One of our strengths has been the simplicity and functionality of the site – being able to get the product you want quickly,” Glover continues. “Functionality has been very important because if it takes too long to find what you want you’ll leave.”

In a recent independent survey BlackStar came out on top for the services it provides. Glover is not planning any industry-shaking price or range promotions but has a lot of faith in the store’s key offer – a 20% discount on pre-orders delivered on day of release, postage free. “It really incentivises people to buy from us. It’s worked very well especially with fans of things like Star Trek and the other collectible series. We also look at value added elements such as posters and guides. “People expect the highest of standards on the internet and a lot of that’s to do with the fact that they’re not dealing with humans. Once customers get to know us they will mail people by name in Customer Care. When they know it’s humans working here they tend to be a little more flexible. It’s very important that we personalise the service.”

And that brings us back to passion pockets: “Fan sites send us wonderful amounts of business – Buffy sites and stuff like that. It would have been impossible to get hold of all those passion pocket people before the internet. Manchester City is another example of passion pocket where we can use our on-line marketing to highlight the product. “We cater for gay and lesbian shoppers as well – splitting the offering into sub-categories makes browsing very easy. Again this is all about passion. It’s what you might find in a very, very specialist store but there’s no way in a million years that you’re going to find it in a traditional high street store no matter how big it is. And they’re certainly not going to have 35 different areas in their store which are so focussed. But with the power of the internet we can do this.”

Glover regards BlackStar as being in competition across the board: “Our competitors are the high street and other e-tailers. Eighty five percent of the market is still in the high street so we have to look at Virgin and HMV and say those guys are competitors. At the end of the day we want a share of everything. In addition to competing for business, Glover is confident that e-tailing is a growing business – and people access the site as a resource just to get hold of the extensive Videolog listings.

From its humble beginnings, BlackStar has enjoyed constant growth and has attracted the finance necessary to achieve it. The builder’s yard where the story began has been left behind in favour of new spacious Belfast offices and a 10,000 sq ft warehouse to house the stock – around 95 percent of orders are shipped within 24 hours. But one thing that remains perfectly intact is, of course, the passion.

BlackStar deal shows tough e-tailing times

Thursday, July 6th, 2000

BlackStar, the video and DVD online retailer, closed its second-round funding yesterday, but underlined the difficulties facing e-tailers looking for money to take their businesses through to profitability.

The company secured £6m – giving it a valuation of about £20m – from wealthy individuals in Dublin. Darryl Collins, finance director, said: “Most [VCs] were very interested. But it is difficult in this environment where they have overstretched in certain areas.” The scale of the change in fortunes for UK e-tailers is illustrated by the second-round valuation. The second round funds also took nearly three months to raise, compared with less than a month for the first round when Mr Collins said: “VCs were jumping into everything that said internet.”

He said the difficult market conditions meant the company was now ‘not on the IPO trail’. But he said BlackStar hoped to take advantage of any change in investor sentiment on the public markets.

Analysts expect a wave of consolidation among start-up business-to-consumer companies as they come to terms with the new environment where capital is no longer as cheap as at the beginning of the year. Mr Collins said there were no plans to get involved in expected consolidation, although it had talked to a number of companies and was keeping an open mind.

BlackStar Investment

Wednesday, July 5th, 2000

BlackStar, a Northern Ireland based online video retailer, has delayed its listing on the London Stock Exchange due to investors’ dwindling appetite for Internet investments, the British Broadcasting Corp. reported on its Website, citing the company’s Marketing Director Jeremy Glover.

BlackStar, which has monthly sales of about 1 million pounds ($1.5m) per month, said in April it planned a share sale and has raised £6 million from investors. “The ability to raise £6 million in current circumstances is a real vote of confidence in our business model, even as the listing was delayed,” said Glover.

The company, which has recently added cinema and television listings to its Web site, expects to become profitable before year end, the BBC said.

BlackStar looks to future

Wednesday, July 5th, 2000

Video e-tailer BlackStar has the confidence of its financial backers to play a long-term strategy before entering the stock market, one of its founders said yesterday.

Darryl Collins was speaking after the company secured £6.5 million of second round funding.

“We’ve secured £1 million each from financial investors and the rest was raised from a private placement in Dublin,” Said Mr Collins.

He said the market conditions for the company to float were “unlikely to return until the end of the year, through to 2001”.

The company had indicated it might float on the market this year or earlier in 2001, but Mr Collins said the focus for the company in the short term was in building on “our strong position to keep growing the business.”

Europe’s Top 100 Internet Ventures

Sunday, July 2nd, 2000

Number 13 – BlackStar.co.uk

A star performer from Northern Ireland, BlackStar has customers in more than 100 countries and is a B2C internet company that is pulling in real money. Think of Amazon, cut out everything but movies and you have BlackStar.

The trio who founded the company are Darryl Collins, the chief executive, who has a film-production background, Tony Bowden, who set up the first net company in Northern Ireland and Jeremy Glover who was formerly with the McCann-Erickson advertising agency.

The company, launched in January 1998, exploited the fact that there was no American competition in videos (they have a different format there). BlackStar is busy cashing in – with all current-release videos and DVDs on offer. The site is open 24 hours a day, 365 days a year and provides free delivery.

Last August, BlackStar arranged backing for expansion from Atlas Venture and a consortium led by David Bonderman, the Ryanair chairman. Some of the investment has been spent sponsoring Formula One – the company has its logo on the helmet of the Jaguar driver Eddie Irvine.

BlackStar employs simple but effective techniques to ensure customer satisfaction, including a full-time e-receptionist.

BlackStar gets £6m to fund further expansion

Saturday, July 1st, 2000

Online DVD and video retailer BlackStar has raised over £6m from its secound-round funding. The money comes from existing investors Atlas Venture and Tarrant Venture, in addition to a group of private individuals.

The fresh injection of revenue means the UK’s largest e-tailer of DVDs and videos (www.blackstar.co.uk) is now valued at £20m.

The money will be used to fund its marketing campaign and further site development. The company also aims to build on its customer service and take on new staff. Jeremy Glover, co-founder and one of BlackStar’s directors, believes that the company has carved a strong position for itself. “We have built a good brand,” he said. “In the current climate, the funding is a massive vote of confidence.”

After the failure of boo.com, BlackStar decided against an IPO that would have raised a possible £50m and turned to the private placement market instead. It aims to make a profit by the middle of next year. “Once we prove that we can turn a profit in the UK, we can think about moving into Europe,” said Glover. With 200,000 customers, the site pulls in £1m revenue and five million page impressions a month. It has also recently introduced a film and TV listings service where users can search for entertainment information.