Blockbuster to buy film download service

Video rental chain Blockbuster Inc. said Wednesday that it was buying the digital movie download service Movielink, giving it the online foothold it had long sought to compete with rival Netflix Inc.

Terms of the deal were not disclosed.

Blockbuster said it would continue to operate Movielink as a stand-alone service and eventually would make elements of the service available through Blockbuster.com.

Santa Monica-based Movielink was launched by five studios in 2002, marking the first time that a large supply of recent, popular films was available for rent on the Internet.

The privately held service has struggled to gain popularity, even as it has allowed the purchase of films and signed licensing agreements with all the major studios and a large number of independent film companies.

“Our acquisition of Movielink, with its associated digital content, is the next logical step in our planned transformation of Blockbuster,” Chairman and Chief Executive 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,” he said.

Blockbuster’s Total Access service, which allows customers to receive DVD rentals through the mail, has about 3.6 million subscribers. Netflix has 6.7 million subscribers, who can also download about 3,000 titles directly to a personal computer.

Movielink was launched by the studios to stave off losses coming from people downloading illegal copies of movies over the Internet. It is owned equally by Sony Pictures Entertainment, Universal Studios, Paramount Pictures, Metro-Goldwyn-Mayer and Warner Bros.