Lloyds TSB’s corporate markets division is giving £10.5 million in debt funding to European DVD and games rental service Lovefilm, designed to repay existing debt and invest in VOD technology.

SEE ALSO: Lovefilm Complains High Studio Prices Kneecap Movie Downloads

Financed by Arts Alliance Media, Lovefilm merged with Video Island in 2006 to create one of Europe’s largest online DVD rental stores. Video Island was financed by Index Ventures, Balderton Capital and DFJ Esprit. No word on what kind of stake, if any, Lloyds gets. Amazon (NSDQ: AMZN) is Lovefilm’s largest shareholder after putting its European and German DVD rental ops in to the business last year.

Lovefilm ran a high-profile marketing campaign over the holiday period and in a release today, announced record sign-ups over the period, leading to over one million total subscribers. It said it turned profitable last year and expects to grow income 50 percent from the last year. Lovefilm may be finding good custom in the crunch amongst folk less keen to spend on pricey cinema tickets, but just over a year ago it complained excessive wholesale movie prices from studios made its nascent download-to-own offering too expensive for consumers. This, though, is a big validation for Lovefilm’s model and its team.

The new-look Lloyds Banking Group started trading on the markets this week after merging with HBOS, but opened to falling value and concern over possible job losses.