Movielink Becoming a Threat to Netflix and Blockbuster?

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

Movielink to Offer Films Online That May Be Copied on DVDs

• Summary: Movielink LLC will announce today that it has licensed technology from Sonic Solutions that allows consumers to download movies from the Internet and burn them on to DVD. This will allow Movielink's customers to watch movies on their TVs rather than their PCs without having to set up a home network. But Movielink needs to get the approval of the movie studios, which may be reluctant to cannibalize their sales of DVDs to Wal-Mart and other retailers, and may be concerned about pirating, despite the Sonic Solutions anti-piracy technology.
• Comment on related stocks/ETFs: Strongest potential stock impact on Sonic Solutions (SNIC). Also potentially impacts sentiment (though not short-term revenues or profits) for the DVD rental stocks, Netflix (NFLX), Blockbuster (BBI) and Movie Gallery (MOVI). Netflix defenders will point out that Movielink offers only 4% of the titles offered by Netflix (see the comments in Netflix' Q4 2005 conference call transcript). But Movielink is jointly owned by the movie studios -- Viacom (VIAB) via Paramount Pictures, Sony (SNE) via Sony Pictures Entertainment, Vivendi Universal (V) via Universal Studios and Time Warner (TWX) via Warner Bros. Studios -- and they have a strong profit incentive to disintermediate the movie rental companies in the long run. Movielink's small inventory is largely a problem of licensing, and is in the studios' ability to resolve. Also, the recent success of TV program downloads will encourage the studios that Movielink could be a long term success.