Blockbuster Inc. (NYSE: BBI) announced today that it purchased movie download service Movielink, though terms of the deal were not disclosed.
Movielink
was launched in 2002 by a collaboration between Metro-Goldwyn-Meyers
Studios, Paramount Pictures, Sony Entertainment Pictures, Warner Bros.,
and Universal Studios. This stable of major film studio backers allow
Movielink to offer some 3,300 movie titles available for legal download.
The deal can largely be seen as a response to
Netflix Inc. (NASDAQ: NFLX) offering subscribers the ability stream movie titles from its website.
In
an interview James Keyes, Blockbuster's CEO, said "We're taking a fresh
look at the future of Blockbuster. The popularity of [online rentals]
convinced us that customers are ready for more convenient forms of
digital delivery that we think Blockbuster can successfully enter."
Blockbuster
Total Access, Blockbuster's mail-delivery movie service in the mold of
its main competitor Netflix, has less total subscribers than its rival
but is growing much faster. In fact, in the second quarter of this year
Netflix lost 55,000 subscribers - its first quarterly decline ever -
while Blockbuster added 660,000 thanks to aggressive advertising and
pricing.
Despite these numbers Netflix is still the clear leader
of movies-by-mail with some 6.7 million subscribers to Blockbusters 3.6
million; however, both services see that the future almost certainly
lies in digital content delivery.
Sources familiar with
Blockbuster's purchase of Movielink say talks began in February for a
cash-and-stock deal worth about $50 million, though an insider said
yesterday that the deal was for all cash and worth significantly less
than that figure.
The aggressive strategy to continue attacking Netflix on every front definitely makes BBI a stock
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