Sidling into the fragmented business of Internet-video downloads, Blockbuster late Wednesday announced it has acquired Movielink.
Movielink was formed in 2002 as a joint venture of five movie studios: Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Pictures and Warner Bros. Studios.
Terms of the deal were not disclosed. The Wall Street Journal reported the deal was worth less than $20 million, citing an anonymous source. The newspaper previously reported that the two companies were in acquisition talks.
The deal lets Blockbuster square off against its upstart rival Netflix in the online realm. Netflix, which pioneered the DVDs-by-mail rental business, earlier this year launched Watch Now, which lets subscribers watch a limited number of movie titles via a streaming-video player on their PC.
Blockbuster also now will directly compete with other numerous other outlets for premium video content online, including Apple’s iTunes, Amazon.com Unbox, Starz Entertainment's Vongo, WalMart.com and CinemaNow.
With Movielink, Blockbuster has access to a library of thousands of movies and TV shows from the five member studios and 30 other studios, distributors and content providers including Walt Disney Pictures and Lions Gate Entertainment. Movielink sells both on-demand rentals and download-to-own.
“Our acquisition of Movielink, with its associated digital content, is the next logical step in our planned transformation of Blockbuster,” CEO 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."
Keyes, formerly CEO of 7-Eleven, was appointed top executive at the rental chain last month.
Blockbuster said it would continue to operate Movielink as an independent service and eventually make elements of it available through Blockbuster.com.
It wasn't a secret Blockbuster was preparing to get into Internet movie distribution. In June, Lions Gate CEO Jon Feltheimer let slip that his studio had inked an Internet video-download deal with Blockbuster.