08.13.2007 02:47 PM
Blockbuster buys download service Movielink

Blockbuster bought Movielink, the film download service. Terms were undisclosed.

Blockbuster, in fierce competition with Netflix, has been negotiating to buy the Movielink service since last March. The company wants to expand beyond the store-based movie-rental market.

Last spring, Reuters reported that estimates for the deal were in the neighborhood of $50 million in cash and stock. The news service, however, reported that the final sale was an all-cash deal and at a substantially lower price. The “Wall Street Journal” reported the final price was less than $20 million.

Blockbuster said the Movielink acquisition will give it “access to one of the largest libraries of downloadable movies and a large array of television content.” CEO Jim Keyes told Reuters that Blockbuster would operate Movielink independently and eventually make elements of the service, with more than 3300 titles available to download, available through blockbuster.com.

Competition is intense in the tiny download movie market. Netflix’s 4000-title movie-streaming service launched this year. Movielink also competes with Apple iTunes, Vongo and CinemaNow offering only a fraction of the 70,000 titles available on DVD. Blockbuster also has a stake in CinemaNow.

Reuters said Movielink has struggled to gain traction in the market, but Keyes noted the challenges were common to all companies in the sector. “It’s an emerging market and all the players are trying to find the right formula. It’s not a unique challenge for Movielink,” Keyes said.

Movielink was launched in 2002 by major studios including MGM, Paramount, Sony Pictures, Warner Bros. and Universal.

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