So the deal is done, after long and hard months of negotiation and trying to get the studios on board: Blockbuster (NYSE: BBI) has an online strategy on the cheap: it has bought online movie service Movielink. The price was not disclosed, but we do know that there is a surprisingly low cash amount involved (much lower than WSJ’s “less than $20 million” figure here)…it will in all probabilities be disclosed in SEC filings in the next week or so. Movielink will continue to operate as a standalone service and eventually make elements of the service available through Blockbuster.com.
Movielink was launched by five studios– Sony Pictures Entertainment, Universal Studios, Paramount Pictures, Metro-Goldwyn-Mayer and Warner Bros.–in 2002…at that time it was novel, but the service was hampered by the small catalog, lack of ease of use, and at that time, lack of broadband penetration. Only one of those three things has improved: the broadband penetration.Movielink has VOD and EST license agreements with the five founding studios, as well as more than 30 other studios, TV-content distributors, and foreign and independent content providers, which will help beef up Blockbuster’s digital repository. More details in release.
Meanwhile on the online DVD rental side, Blockbuster’s Total Access service has made big strides recently, and has about 3.6 million subscribers. Netflix has 6.7 million subscribers and also lets them stream about 3,000 movie and TV shows online.
WSJ: After pouring more funds than originally expected into building the infrastructure — more than $100 million — the studios were reluctant to spend much more to promote the service, the story says. Blockbuster would “increase awareness” of the service by promoting it to the chain’s customers.