Blockbuster Buys Movielink, As Expected
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 …
Context & Ripple Effects
The deal closes a five-month arc: Ars Technica reported in March that Blockbuster was close to acquiring Movielink, and by June a studio chief was telling reporters that Blockbuster and Best Buy both planned movie download services. What changed between then and now is studio buy-in — months of negotiation ended with the content owners on board, which for a download service is the whole ballgame.
The undisclosed price and paidContent's 'on the cheap' framing suggest Blockbuster bought its way into digital distribution rather than building it — acquiring existing studio licensing relationships through Movielink instead of negotiating them from scratch. For a company whose revenue still runs through physical stores, that is a defensive purchase as much as an offensive one.
First-order effects
- Blockbuster gains a functioning online download service with studio deals already signed, letting it enter digital distribution without months of fresh licensing talks.
- Movielink, a standalone player with no retail footprint, now has a national store network behind it — while rival retailer Best Buy, named in the same June studio-CEO report, loses the chance to be the first big-box chain in downloads.
Second-order effects
- Best Buy is now under pressure to announce its own download play or cede the electronics-retailer lane; the June reporting framed the two companies as parallel launches, so one without the other changes the competitive math.
- Netflix and Apple's download businesses face a competitor that can cross-promote online rentals against its stores — pricing and bundling of download-versus-disc rental becomes the next battleground.
Third-order effects
- If the pattern holds, video retail consolidates around companies that own both physical distribution and licensed digital catalogs, squeezing out pure-play download services that lack either studios or storefronts.
- The deal is also a hedge against itself: every customer Blockbuster moves to downloads erodes late-fee-heavy store revenue, so the structural question is whether incumbents can migrate before their core business does it for them.
The trend: Movie rental incumbents are acquiring their way into downloadable distribution ahead of the shift from discs to digital delivery, with studio licensing as the gatekeeper.