Blockbuster Buys Movielink, Enters Download Market

After months of negotiations, Blockbuster said late Wednesday it acquired Movielink LLC, an online movie downloading service owned by major Hollywood studios. Terms of the deal were undisclosed; the Wall Street Journal says that according to an unnamed source, the final price was less than $20 million. The deal is the latest tack in Blockbuster's transformation from a retail-store-only movie provider. It already competes with rival Netflix in the mail-order rental business, and Movielink will allow it to begin exploring the downloadable movie market. In an interview, CEO Jim Keyes told the WSJ he planned to integrate MovieLink with the company's website, allowing subscribers to download a movie or receive it by mail. The company was formed by a joint effort of major movie studios, including MGM, Paramount, Sony, Universal and Warner Bros., in 2002. After sinking more than $100M into the venture without much to show for their efforts, the studios were reluctant to spend more money to promote the service, leading to the sale. Keyes said Blockbuster would increase awareness of the product by promoting it to its existing customer base. Wedbush Morgan analyst Michael Pachter called the acquisition a 'defensive' move by Blockbuster to "keep up with Netflix. In the long run, if they are successful in neutralizing Netflix, this will work out," he said.

Sources: Press release, Wall Street Journal, Bloomberg
Commentary: Netflix's New Downloads: Sealing the Coffin on the Cable and Satellite Providers? • The Evolution of Video Rentals
Stocks/ETFs to watch: BBI, NFLX

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Comments

[movie downl...:]

Wow, may be we'll have good service.

Jan 26 12:31 PM