World's third-largest retailer nabs VOD company

Tesco, the world’s third-largest retailer, has bought a majority stake in video-on-demand company BlinkBox.

The idea behind the move, announced a day after U.K.-based Tesco reported net profit of £2.66 billion ($4.3 billion), is to compete head on with existing services, such as Amazon’s LoveFilm.

The supermarket giant acquired its 80% stake in Blinkbox from Eden Ventures and Nordic Venture Partners for an undisclosed sum.

Tesco said this will help position it for “the next stage in the Internet-driven revolution in home entertainment.”

BlinkBox, which has content deals with Warners, Paramount and Fox, was set up by former Channel 4 and Vodafone execs in 2006 and bowed two years later. Service offers free and paid-for downloads from a library of 9,000 film and TV titles.

Tesco sells DVDs in its stores, but with many consumers now expecting to get their entertainment online, the company clearly felt it needed to secure a place at the new-media table.

Move parallels Walmart’s decision to buy Vudu last year.

Richard Brasher, CEO of Tesco’s U.K. operation, said, “Whether customers want to own the DVD, download a digital movie, stream a rental or all three, Tesco is committed to giving customers choice. We want to allow them to decide how they access entertainment content and on which devices, whether it’s on PC, TV or tablet.”

Added BlinkBox topper Michael Comish: “This partnership represents another step forward, bringing the leading movie streaming service together with the U.K.’s biggest retailer.”

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