Summary:

Blinkbox will connect with Tesco’s well-regarded customer loyalty programme to enable de-facto format-shifting of movies, after the supermar…

Blinkbox will connect with Tesco’s well-regarded customer loyalty programme to enable de-facto format-shifting of movies, after the supermarket bought 80 percent of the PPV online movie service.

“We are excited to be able to offer our services to Tesco’s customer base of 17 million Clubcard holders across the UK and their 3.2 million unique users a week online,” a company spokesperson tells us.

Clubcard is thought of as the holy grail of customer relations in the retail industry, because it can understand, mine and profile consumers’ habits, which Clubcard likely understands as well as shoppers themselves.

How could Blinkbox use Clubcard? There’s one clear suggestion in Tesco’s UK CEO Richard Brasher remarks: “The acquisition of Blinkbox, together with a range of other services currently in development, means we can link physical purchase of a product to the building of digital collections in a new and seamless way. Working with the Blinkbox team and our content partners, we will bring these compelling propositions to life for our customers.”

Imagine it – when you buy a movie DVD at the checkout, logged using Clubcard, you also gain the right to view that same movie on the web, or game console, or internet-connected TV. A DVD and a stream become the same thing.

Clubcard is the glue which, because it tracks physical purchases, knows what digital equivalents to serve up at home. Suddenly, multi-platform accessibility becomes a reason to buy your DVDs at Tesco versus another store – and, therefore, a reason to shop for groceries at Tesco.

The UK has not yet de-criminalised consumer format-shifting of physical media content, despite a government-commissioned report having advised it to do so. But this kind of multi-device access plugs this legal gap. Of course, digital services like Blinkbox are already enabling cross-platform access on a multitude of devices – but aligning that with physical discs is something else.

“Tesco is committed to giving customers choice,” Brasher said. “We want to allow them to decide how they access entertainment content and on which devices, whether it’s on PC, TV or tablet.”

C21: “Tesco earlier this year became a member of the Digital Entertainment Content Ecosystem (DECE), a cross-industry initiative designed to create what it describes as a level playing field for next-generation entertainment. In essence, what this means is creating a digital rights management system called Ultraviolet that ensures that the likes of Apple (NSDQ: AAPL) do not dominate the space.”

Blinkbox had been in play as an acquisition target since at least around the time Lovefilm was acquired by Amazon (NSDQ: AMZN) in January – something which oundoubtedly spurred this deal. Tesco was by no means the only suitor, but did prove to be the most aggressive.

Though Tesco paid an unknown amount to buy out the 80 percent of Blinkbox held by investors Eden and Nordic, “employees still hold shares in the company”, Blinkbox tells us.

The company won’t say what, if anything, is happening with the remaining 20 percent, but we understand Tesco wants to keep the current management team, led by CEO Michael Comish, in place. Former MTV digital media president Mike Salmi, a Blinkbox board member from the start, has left the board with this sale, however.

Blinkbox will also power PPV online movie rentals for Tesco’s website generally. “We look forward to integrating with the company’s deep digital skill set across product, technology, strategy, rights and marketing,” the company tells us.

Interestingly, Tesco Entertainment’s current DVD and game rentals are supplied by Blinkbox rival Lovefilm, which, as the market leader in that space, has several such deals. We think it unlikely Tesco would deliver online Blinkbox access to movies its customers rent via Lovefilm, however.

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