A smart move by Blockbuster:
Blockbuster to Buy Movielink
Move sends movie rental company into digital downloads.
August 9, 2007
By Alexandra Berzon
Blockbuster said Thursday that it had agreed to acquire Movielink, the digital movie downloading service backed by Hollywood studios.
The deal will put Blockbuster in direct competition with an emerging group of digital movie download services that include CinemaNow, Amazon, BitTorrent.com, and Apple’s iTunes. Rival DVD rental service Netflix in January letting customers stream a limited selection of older and lesser known movies to their computers as part of their monthly subscription package.
Blockbuster will gain access to the thousands of recently released movies and television shows now available through Movielink. Analysts said the deal, terms of which were not released, could force Netflix to increase the quantity and quality of movies available for streaming.
Blockbuster had been losing ground to Netflix until the brick and mortar rental company moved to mimic the upstart’s business model, in which customers order movies via the Internet and receive them by mail.
In a statement, Blockbuster Chairman and CEO Jim Keyes said the Movielink acquisition is part of the company’s effort to keep up with the “changing needs of customers.”
“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,” said Mr. Keyes.
That last step will be key to spurring the mainstream adoption of online movie downloading, which may still be several years away, say analysts.
“Consumers are saying, ‘This sounds interesting, but how do I get this off the PC?’” said Gartner analyst Mike McGuire. “That’s a home networking issue, and it’s still pretty hard to wirelessly stream something from a PC to a TV.”
Mr. McGuire said that in the meantime, the growing sales of portable notebook computers could help create more demand for digital movie downloading, as consumers seek to download movies that they can view on their computers when they’re on the go.
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