Blockbuster Buys MovieLink Download Service

For a while now, Netflix has boasted as being the only DVD-by-mail service that also enables live viewing of movies online through its website. Now Blockbuster seems to be getting into the game by purchasing Movielink, a digital movie download service that allows users to rent downloadable movies to their PCs. Current pricing starts at just $0.99/movie and more current releases are priced around $4.99 for a 24-hour rental (movies are stored for up to 30 days and the 24-hour viewing period starts upon play). The Netflix system doesn't currently cost its users anything, however only older movies are included in the line-up. It will be interesting to see how Blockbuster uses this new technology which supports both rental and "owned" downloads. Perhaps new movies will still incur additional fees while older movies may be released as rentals at no charge.

Blockbuster has indicated it will run MovieLink as a standalone service but incorporate some of the technologies into Blockbuster online. Presumably this would indicate that some form of free online rentals are coming soon to users of the online rental service. Having the option of a physical rental, a movie in the mail and a downloadable movie is highly compelling indeed.

"Many of our stores still say 'Blockbuster Video,'" Chief Executive James Keyes said in an interview recorded at the Baltimore Sun. "We're taking a fresh look at the future of Blockbuster. The popularity of (online rentals) convinced us that customers are ready for more convenient forms of digital delivery that we think Blockbuster can successfully enter."

This isn't the first time Blockbuster had been in talks with MovieLink. Back in February both companies were talking and the deal/offer was valued somewhere around $50 million in cash and stock. This time the deal looks to have gone through thanks to a change in management at Blockbuster. Currently Netflix has around 6.7 million subscriber to Blockbuster's 3.6 million, though Blockbuster seems to be growing at a much faster rate with 600,000 new subscribers added in the second quarter of this year (Netflix actually lost 55,000, a first for the company since it began in 1999).

Netflix has tallied over 5 million downloads of its Watch Now movie service this year, so it looks to be something that is gaining in popularity.