In its ongoing tit-for-tat battle with online movie-rental pioneer NetFlix, Blockbuster has acquired MovieLink, the web-based download service founded by the big-name Hollywood studios in 2002.
Following several months of negotiation, the worldwide rental chain snapped up the service for less than $20m, The Wall Street Journal reports.
"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 chairman and CEO Jim Keyes. "Our acquisition of Movielink, with its associated digital content, is the next logical step in our planned transformation of Blockbuster." MovieLink draws its online flicks from the libraries of Metro-Goldwyn-Meyer, Paramount Pictures, Sony Pictures Entertainment, Universal Studios, Warner Brothers, Walt Disney Pictures, and more.
Since it opened for business in 1998, the plucky NetFlix has dealt a serious blow to Blockbuster's brick-and-mortar rental stores, perfecting the art of taking rental orders over the web and shipping flicks through the mail. Blockbuster recently followed suit with its own discs-through-the-mail service, Total Access, which allows customers to rent through the company's retail stores as well as online, but NetFlix still dominates the web market, boasting nearly 4 million more customers.
Meanwhile, after pulling down nearly $1bn revenues in 2006, the Silicon Valley company launched its own video-on-demand service, Watch Now, in January of this year, letting users stream flicks straight from the web. With MovieLink, Blockbuster hopes to compete on this front as well.
The Journal reports that the big studios spent more than a $100m building MovieLink's download service, and with scant funds left over for marketing, the site has failed to reach a wide audience. According to the latest numbers from research firm NPD Group, which predate the debut of the NetFlix streaming service, Apple's iTunes dominates the paid downloads market with a 90 per cent share, compared with MovieLink's 3 per cent.
"The studios' goal with the Movielink service has always been to make digital entertainment content more conveniently, more widely and more securely available to consumers. This acquisition should further that goal," said MovieLink CEO Jim Ramo. "With Blockbuster's ability to leverage its store network, online assets, and marketing expertise, Blockbuster should be able to grow the market for digitally-delivered entertainment content, and we believe that's good news for consumers and content providers alike." ®
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