Blockbuster buys digial movie download company

By GARY GENTILE

AP Business Writer

LOS ANGELES Video rental chain Blockbuster Inc. said Wednesday it is buying the digital movie download service Movielink, giving it the online foothold it has long sought to compete with rival Netflix Inc.

Terms of the deal were not disclosed.

Blockbuster said it will continue to operate Movielink as a stand-alone service and eventually make elements of the service available through Blockbuster.com.

Movielink was launched by five studios in 2002, marking the first time that a large supply of recent, popular films was available for rental on the Internet.

The privately held service has struggled to gain popularity, even as it allowed the purchase of films and signed licensing agreements with all major studios and a large number of independent film companies.

"Our acquisition of Movielink, with its associated digital content, is the next logical step in our planned transformation of Blockbuster," chairman and chief executive Jim Keyes said in a statement.

"Now, in addition to the entertainment content we provide through our stores and by mail, we have taken an important step toward being able to make movie downloading conveniently available to computers, portable devices and ultimately to the television at home," he said.

Blockbuster's Total Access service, which allows customers to receive DVD rentals through the mail, has about 3.6 million subscribers. Netflix has 6.7 million subscribers and also lets them download about 3,000 movie and TV titles directly to a personal computer.

Movielink was launched by the studios to stave off enormous losses coming from people downloading illegal copies of movies over the Internet. The company is owned equally by Sony Pictures Entertainment, Universal Studios, Paramount Pictures, Metro-Goldwyn-Mayer and Warner Bros.