Rental giant to offer new downloading service

After a year of rumors, Blockbuster Video has acquired studio-owned movie download service Movielink, putting the largest rental retailer in the digital business overnight.

Terms of the deal were not disclosed.

This was Blockbuster’s second attempt to buy the online movie service, which last year rejected a $70 million bid from the rental giant. In March, word surfaced that talks were back on, this time with a $50 million price being floated.

Blockbuster said Movielink will continue to operate as a download service at Movielink.com and eventually, parts of the service will be integrated into Blockbuster.com, home of the company’s DVD-by-mail rental service.

Blockbuster chair and CEO Jim Keyes called the deal the next “logical” step in the company’s transformation.

“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 TV at home,” he said.

Blockbuster’s main competitor, Netflix, launched an online movie service in January, and video retailers Amazon.com and Wal-Mart have launched online services.

The Movielink acquisition brings Blockbuster into the download business with distribution deals with most of the major studios.

Movielink was formed in 2002 as a joint venture between MGM Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Pictures and Warner Bros., all of which have distribution deals with the service.

Originally launched as a stop-gap service to offer a legal alternative to pirated films online, the service has been up for sale for the past few years.

“With Blockbuster’s ability to leverage its store network, online assets and marketing expertise, Blockbuster should be able to grow the market for digitally delivered entertainment content, and we believe that’s good news for consumers and content providers alike,” Movielink CEO Jim Ramo said.

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