Dubai: Video Master and Vanilla Music the two major producers of CDs and casettes, have merged to create a new entity Viva Entertainment whose annual turnover could exceed Dh381 million ($104 million) by the end of this year.

However, as digital technology changes the way consumers access music and video, distributors are searching for new ways to reach them via new retail outlets and online portals.

Sophisticated piracy outfits and peer-to-peer sharing have dampened sales of CDs and DVDs around the world, with iconic retailers such as Tower Records announcing they will shutter their stores for good.

"The future is digital," said Umesh Amarnani, a director of Viva Entertainment. "It's going to be huge," Pavan said, "because we're giving the customer who wants to buy a CD the chance to download tracks first, with the convenience of delivering to their door-step."

Viva, which is exclusive distributor for Warner Music and the BBC among others, said sales of Western music failed to climb in recent years but its catalogue of South Asian and Arabic offerings has continued to grow.

The Arabic and Asian markets have stayed buoyant since a large proportion of sales derive from audio-cassette tapes, which remain popular.

Viva, which distributed nearly a million DVDs and CDs last year, collecting revenues of $80 million, has also expanded its presence in the brick-and-mortar world. With its new business model, Viva executives believe revenues will rise over 30 per cent in 2006.

Plans e-commerce music and video portal

In the UAE, Internet access has made it easy for consumers to download music, and pirated DVDs have proliferated. Middle East music and video distributor Viva Entertainment, which operated as Video Master and Vanilla Music until its re-branding campaign last week, has responded to these challenges by planning an e-commerce music and video portal.