Although the companies have been courting each other for some time—speculation recently heated up last March—video rental giant Blockbuster has finally pulled the trigger, spending an unspecified amount of money to acquire Internet-based video delivery service Movielink. Blockbuster sees the most as a way to beef up its online video delivery business, noting the deal give them access to a big library of downloadable movies and television programming. For the time being, Blockbuster plans to continue operating the Movielink service as-is, but eventually plans to offer Movielink-derived online video sales and rental services through Blockbuster.com—and, in so doing, make the business more competitive with Netflix.
“Blockbuster is committed to keeping pace with the changing needs of customers by offering them an expanding array of convenient ways to access entertainment content,” said Blockbuster CEO Jim Keyes, in a statement. “Now, in addition to the entertainment content we provide through our stores and by mail, we have taken an important step toward being able to make movie downloading conveniently available to computers, portable devices, and ultimately to the television at home.”
Movielink is one of the longest-running digital video services, having been founded in 2002 through a joint venture of the major studios Sony, Paramount, UNiversal, Warner Bros., and MGM. However, Movielink struggled to develop its business—although, to be fair, none of Movielink’s competitors like CinemaNow and Vongo have fared much better. Blockbuster also has an investment in CinemaNow. However, with the comparative success of video offerings via Apple’s iTunes store and nascent IPTV platforms like Joost, the market for online video is expected to grow significantly over the next few years—the question is whether Blockbuster can turn Movielink into a service consumers won’t just ignore for another five years.
Back in March, industry watchers placed the purchase value of Movielink at around $50 million. Although details of the Blockbuster purchase have been released, reports have Blockbuster paying a significantly lower amount in an all-cash deal.
