Amazon, the world’s biggest online retailer, is to bow out of DVD rentals and throw its weight behind Lovefilm, the leading European specialist, in the latest shake-up of the home entertainment market.

The US company is to transfer its subscribers – who participate in an old-meets-new process of ordering films via the internet but receiving and returning them via the post – and inject some cash to Lovefilm in exchange for a stake believed to be about 30 per cent of the company and valued at about £60m to £70m.