Rich Fiscus
28 Oct 2007 0:31
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