The Wall Street Journal this week reports that Blockbuster is about to make a move for the oldest of all the movie download services, Movielink, set up initially by studios, Paramount, Sony, Universal, Warner Brothers and MGM.
Movielink is the worst kind of online film service, with ancient DRM, no overseas distribution rights and tied into service contracts that make it difficult to move the service on.
Blockbuster was one of three potential acquirers listed last June as vying for the service, the other two companies were Comcast and AT&T. Blockbuster is said to be paying around $50 million in cash and stock, for the service.
The previous aborted negotiations fell foul of new conditions that the studios wanted to saddle the service with, which are perhaps going to be relaxed now that other companies have better online service rights.
Movielink came into existence in 2001 and began renting movies in 2002, but only on a time limited, single device basis. Movies could be stored for 30 days, but would expire within 24 hours of beginning to view them. Through 2003 and 2004 Movielink chased internet traffic with ISP deals, but very little progress came of it. Today it is thought to do around $20 million in revenues, after spending some $150 million in start up cash.
The problem of Movielink is all about the motives for setting it up. It mostly offers films that are in the pay per view window and has never hosted a huge archive of classics. The company has also never written its own download manager, like iTunes and relies on a simplistic web interface.
The sticking point on previous negotiations appeared to be guaranteeing that Movielink will continue to have permission from the studios to sell, and not just rent, films. The movie studios were thought to be trying to sell off Movielink with only a year’s rights to sell DVD files, which they might rescind in the future as they launch their own initiatives. We presume that Blockbuster has managed to get the studios to change those restrictive terms.
We used to joke that Movielink was set up so that it would prove to the world that downloading films doesn’t work and give Hollywood a few years thinking time to see what it really wants to do in this market.
Last year there has been some movement in the strategy of Movielink with its signing a deal to offer its films through Akimbo, which allows downloads straight to a set top for viewing on a TV, not a PC, and with a new deal announced to allow Movielink to actually sell movies, although they remain more expensive than DVDs purchased from Amazon.
Last year CEO Jim Ramo was known to be working with Salem and Partners to help engineer a sale.
The big online movie efforts are from Apple, Amazon and Wal-Mart but last year services from Starz Vongo, Google, Sony, Clear Channel, 4Flix and Blinkx, Arvato, BSkyB, LoveFilm and NTL were all launched, to name but a few, with no real conspicuous successes.