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Blockbuster reports show Movielink as failed business

28 October 2007 0:31 by Rich "vurbal" Fiscus | 5 comments

Movielink, the video download service recently acquired by Blockbuster lost more than $10 million dollars in just the first half of the year according to Blockbuster financial reports which will be released at the beginning of next month.

Fortunately for Blockbuster their purchase wasn't intended to breathe life into Movielink's existing business model. Instead they were motivated by the prospect of adding some kind of download or Streaming component to their Total Access DVD rental service. While allowing Total Access customers to return DVDs to brick and mortar stores for faster turnaround has proven popular with some consumers, it's proven equally costly for Blockbuster, resulting in limits being imposed on in-store returns.

The Netflix answer to Total Access has been their Watch Instantly feature, which makes a small but growing selection of movies and television shows available to stream to a PC. A loss of customers for the first time in the company's history, primarily attributed to competition from Blockbuster, caused Netflix to place more emphasis on streaming.

If Blockbuster is successful in molding Movielink into a service that complements their online rental service it would be a coup for their CEO, who has already been responsible for cost cutting measures including the restrictions on Total Access subscriptions.

Blockbuster spokesman Randy Hargrove noted that the company isn't concerned with either Movielink's recent financial history or independent auditor PriceWaterhouseCoopers' report that the service wasn't sufficient to sustain an independent company. He said "We've started folding in Movielink's operations into ours, and we're already finding economies of scale and don't believe that Movielink's past financials are any indication of the future."

Source: The Dallas Morning News

Permalink to this article

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Discuss this article!
sssharp (Junior Member) 28 October 2007 21:01
The rental shops and film industry want to kick some azz in the money market do this. When that movie is released make it streamed/downloadable to families at home. This will get more money from people who dont pay 10-20 bucks (ticket,food,drinks) to see the good rated but actually crappy flick. I am a delayed watcher until it hits ppv, dvd's rental etc. I (others also) lose interest after the first few weeks of the flick at the cinema. Give the movies to us now in all possible ways if you want our cash. [ + quote]
P51ride (Newbie) 29 October 2007 2:14
Agreed but the video file must be DRM free and in an open source format. [ + quote]
pryme_H (Senior Member) 30 October 2007 0:59
This was expected. I wouldn't be surprise if Chapter 11 is filed next. We lie! We cheat! We steal! [ + quote]
S2K (Member) 30 October 2007 14:03
netflix download "service" is a money burner too. [ + quote]
borhan9 (AfterDawn Addict) 1 November 2007 17:28
Looks to me that NetFlix had all the nails already set in the coffin they just had to hammer down for this poor Blockbuster to go underground. :) [ + quote]