Tesco ramps up digital pic sales

Suppliers welcome new pipeline as grocer stocks Blinkbox

LONDON — Tesco, the U.K.’s biggest retailer, has made a concerted drive into digital entertainment over the past 18 months, with the acquisition of VOD platform Blinkbox, music site WE7 and most recently, e-book seller Mobcast.

Blinkbox’s founder Michael Comish, now Tesco’s CEO of digital entertainment, oversees all three services.

“Where traditional DVD sales are migrating to digital, we need to make sure we benefit from that,” Comish says.

He sees Blinkbox as a competitor to iTunes, which leads the U.K. market in digital film sales and rentals. The advantage for Blinkbox, he argues, is its open system — with films playable on any device.

He says subscription services offered by Netflix and Lovefilm offer much older (and less) product, , because the subscription VOD window comes much later than VOD, which is simultaneous with DVD release and is non-exclusive.

“The difference between Blinkbox and Lovefilm or Netflix is 18 months,” he notes. “All our product is available on DVD and VOD at the same time, and sometimes ahead of it in the case of TV shows like ‘Game of Thrones,’ which is on Blinkbox six months before DVD.”

The Blinkbox model appeals to distribs, who are trying to keep DVD alive while ramping up digital. Any Tesco loyalty-card member who buys a physical DVD in-store automatically gets a digital copy of the selection in their Blinkbox locker. Rival supermarket Sainsburys is reportedly close to launching a similar service, while both Asda and Morrisons are looking to enter the digital space.

“It’s good news that Tesco and Sainsburys are getting into digital,” says John Rodden, Studiocanal U.K.’s home entertainment topper. “They expect our support to develop that market, and we welcome the chance to extend the shelf life of our product. They have come out and said they are very much supporting film, and see it as a key part of their business, which is great.”

Comish says Blinkbox gets 1 million-2 million customers a month, split evenly between rental and sales.

Blinkbox has 10,000-15,000 titles. That’s twice the number of streaming titles on Lovefilm or Netflix, but around a quarter of the physical DVDs theoretically available to rent by post from Lovefilm.

But since Blinkbox stores 26 different versions of every film to account for all viewing platforms, Comish notes that the cost of adding a new title is not free because of these encoding costs. “It would probably be uneconomical for us to offer 50,000-60,000 titles,” Comish says.

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