Blockbuster acquires Movielink to offer video downloading services

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The video rental chain Blockbuster said yesterday that it had acquired the Internet movie provider Movielink to offer video downloading services to customers.

Blockbuster is also acquiring rights to show the films of Movie- link’s owners, which include Warner Brothers Studios, Metro-Goldwyn-Mayer and Paramount Pictures, it said. Financial terms were not disclosed.

“It immediately puts us in the digital download business,” Blockbuster’s chief executive, James W. Keyes, said. “Clearly, our customers have responded favorably to having other convenient ways to access movies and entertainment.”

The purchase provides Blockbuster with a way to send movies straight into televisions and computers, complementing its store and movie-by-mail operations, where it competes with Netflix.

In the last year, Netflix, Apple, Amazon.com and Wal-Mart Stores have introduced movie download services.

Michael Pachter, an analyst at Wedbush Morgan Securities in Los Angeles, called the acquisition a defensive move by Blockbuster to keep up with Netflix. “In the long run, if they are successful in neutralizing Netflix, this will work out,” said Mr. Pachter, who does not own Blockbuster stock.

Shares of Blockbuster rose 37 cents, or 8.75 percent, to $4.60, in after-hours trading.

Movielink, based in Santa Monica, Calif., was started in 2001. The company’s other owners include General Electric’s movie unit Universal Studios and Sony Pictures Entertainment.

Blockbuster is an investor in a Movielink competitor, CinemaNow, which has 4,000 film, TV and concert titles, compared with Movielink’s 3,300. CinemaNow allows customers to stream videos; Movielink does not.

Blockbuster will retain a small stake in CinemaNow, a spokeswoman, Karen Raskopf, said.

Blockbuster said this year that it might seek a partner in 2007 to start a video downloading service. Last year, the company introduced an online movie subscription plan to lure customers away from Netflix, the largest Internet movie rental company.

The two companies offer similar plans and have repeatedly lowered prices or modified services in an effort to win customers.

Source : ZDNet

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