The managing director of the Movie Magic video rental chain says he is now effectively "retired" from the business with which he has been involved for two decades. Just before Christmas he sold 12 of his stores around the country to Xtra-vision. He has four left, "for the time being".

Coleman says he saw the writing on the wall. Or maybe it was the end credits. The video rental business has entered a new era. Xtravision, owned by struggling US-based Blockbuster, which is part of the CBS media group, has revamped its shops and transformed its concept, selling electronics goods, music and video games.

Coleman said the capital investment that would have been required radically to alter Movie Magic outlets would simply have been prohibitive. "As they say, I got an offer I couldn't refuse, " said Coleman.

He is now pushing ahead with a small property development business. He's just starting to construct apartments in Italy and recently received approval to build 26 apartments near Cape Town.

The foundations of Ireland's video business are changing fast. There are now just two chains of any substance left in the market. Last year Blockbuster signalled that it would consider offloading its operations outside the US. Within the past couple of weeks it has been rumoured that Blockbuster is stepping up its review.

But the company declined to comment on speculation that the company's advisor, Citigroup, has sent out information packs to private equity houses in the UK whom it believes may be interested in acquiring the business there.

It is expected the British operation, with more than 700 shops (500 could be dogs, said one insider), as well as the other European businesses could fetch as much as £300m ( 434m). Blockbuster as a whole has a market capitalisation of more than $870m ( 690m).

It's likely that much of the purchase price in the UK would relate to the fact that the chain's network of shops would be attractive to other retailers.

Xtra-vision, with roughly 200 stores around Ireland, is likely to command a generous price if sold. Latest accounts for Xtra-vision, for 2004, show that it reported a turnover of almost 109m and posted an operating profit of over 9.3m. Both those figures are substantially up on 2003, when the company reported operating profit of 7.5m on turnover of 89m.

One US-based analyst told the Sunday Tribune that, depending on projections for future sales, Xtra-vision could be sold for anywhere between 65m and 140m, representing between seven and 15 times earnings. He claimed that a sale could be completed as early as a couple of months from now.

Any buyer, however, will be looking at the challenges, as well as the fact that Xtravision leases rather than owns its outlets, which will effectively negate any property play With competition in the market from retailers such as Tesco, Golden Discs and HMV, the video rental business has had to adapt quickly.

It would be surprising if Xtra-vision's management team, headed by Martin Higgins, did not indicate an interest in the business should Blockbuster formally decide on a disposal, although the team would face competition from other parties.

Managing director of Chartbusters, Richard Murphy, said that projected DVD rentals for the coming fiscal year will account for just 29% of the company's business - a figure thought to be about 3% lower than Xtra-vision's.

A significant portion of trade from Chartbusters' 46 stores is generated from its tanning service, while its internet service, said Murphy, has boosted growth and enabled the company to further reduce its reliance on the the rental business.

"Rental business just isn't viable on its own, " explained Murphy, adding that the company also has to compete with a growing trade in pirated DVDs, which can be found in markets around the country.

"We're going to reduce the rental rates soon to compete head on with pirate operators, " he said, adding that the first of its franchised stores are expected to open within the next two months.

Murphy also plans to roll out what will effectively be instore business centres where people can come to get faxing, printing, posters and other lithographic services as well as being able to send or receive post.

Murphy said he's confident the move will have a dramatic impact on Chartbusters' business. Online rental competition isn't yet as dramatic as it is in the US, but Screenclick founder and chief executive Frank O'Grady said the company now has 30,000 customers on its books. The business was acquired earlier this year by UK-based Lovefilm. com in a deal that valued the Irish operation at roughly 3m.

Lovefilm has 350,000 customers in the UK.

O'Grady added that Screenclick also provides affiliate online rental services to Four Star Pizza, Eircom and Ticketmaster, while an Irish TV station will also soon be launching a DVD rental service powered by Screenclick.

There can be a air of doom and gloom in the rental business, but the DVD distribution business itself has proved attractive. Last year, publicly-quoted DCC acquired Northern Irelandbased Pilton Group for up to 55m.

Pilton also comprised an online DVD retail business, Sendit. com, which was formerly known as Blackstar.

Pilton investor Peter O'Grady-Walshe acquired Xtra-vision from the receiver when it was in difficulties in the 1990s before later selling it on to Blockbuster.

With Blockbuster's retreat from Europe now in motion and with Xtra-vision up for grabs, more changes to the Irish video rental market are in the offing.