Global DVD, the high street rental chain, has gone into administration with the loss of almost 280 jobs.

The Scottish-based company, which was formed from the ashes of Global Video Ltd, has experienced a 30% decline in sales in the past year as the market for DVD rentals has deteriorated.

It has now called in the administrators. Seven shops will be transferred to former employees and the remaining 47 will be shut, making 276 staff redundant.

Some 31 stores and 164 members of staff in Scotland will be affected, with the remainder in England.

Global DVD was established after Global Video Ltd, founded by tycoon Maq Rasul, went into administration in June last year. In a statement the firm said it had become increasingly difficult to compete with online rental businesses, downloads and the availability of cheap DVDs in supermarkets and other stores.

"We are all naturally very disappointed," Mr Rasul, who was also a director of Global DVD, said yesterday.

"When we restructured last year we knew it was going to be a major challenge to turn the company around, but our principle motivation at the time was to preserve the business and provide continuation of employment to our staff, many of whom had worked for us for years."

Mr Rasul, who moved to Glasgow from Pakistan in 1964, founded Global Video in 1985. At its peak the company had more than 1300 staff and 260 shops, with 1.5 million members across the UK.

The success of the chain transformed Mr Rasul into one of Scotland's richest entrepreneurs, with an estimated fortune of £25m. But in its last two years of operation Global Video suffered trading losses of more than £2.5m.

Around 150 employees at 40 shops were made redundant in June last year and the remaining 87 shops were sold to Global DVD Ltd, which was established by former directors of the first company.

But Global DVD has struggled to compete successfully and yesterday said that pirate copies, downloads and specialist online rental businesses had had a major impact.

It said that consumers were increasingly choosing to buy DVDs from supermarkets, specialist film and music retailers and online businesses. It added the wide range of free-to-view films offered on channels such as Film 4 were also affecting the rental market.

Mr Rasul said that they had hoped to rebuild the business when they formed Global DVD Ltd in June 2006.

He said: "We were confident that we would be able to adjust to the changing market and rebuild both turnover and margins. But the company today bears little relation to the one I started in 1985. The market too has changed beyond all recognition."

Some 276 staff, around 150 of whom are part-time, will now be made redundant. The administrators said they would "work with appropriate agencies to minimise the impact and ensure support is offered to them in the search for alternative employment".

The administrators, Kenny Craig and Tom MacLennan of Tenon Recovery, said they would also be marketing the brand and assets for sale.

Professor Leigh Sparks, of the Institute for Retail Studies at Stirling University, said: "There is a range of different businesses, some of whom will be selling DVDs, others are download or online rental operations, which are picking up some market share."