Hoping to turn a Blockbuster night into a Blockbuster moment, Blockbuster (NYSE: BBI ) is supposedly in talks to acquire flick downloading service Movielink. The Wall Street Journal is reporting that negotiations are underway in a deal that values the struggling online service at less than $50 million.
The price tag would be worth it for Blockbuster. It wouldn't be buying a digital pioneer that is gradually losing ground to recent bigwig entries like Wal-Mart (NYSE: WMT ) , Apple (Nasdaq: AAPL ) , and Amazon.com (Nasdaq: AMZN ) . It would actually be buying a shortcut to the development curve that would get it up to speed with archrival Netflix (Nasdaq: NFLX ) .
Blockbuster's television ads for its Total Access movie rental service falsely attack Netflix on the basis of convenience. It renders a Netflix subscriber waiting by the mailbox as the only way to get a new film, while Blockbuster also allows in-store rentals. In reality, Netflix has been allowing members to stream some of its films -- about 10% of its library -- through their computers for free since January. The selection is limited, but so is the number of available in-store titles at Blockbuster.
Acquiring Movielink would speed Blockbuster's entry into digital rentals and purchases. With a Total Access base that should be 3 million strong by the end of the month and a database of tens of millions of in-store renters, Blockbuster may help save Movielink by promoting it internally while also using the technological platform to match Netflix on the cyberspace front.
This sounds more feasible than the set-top box solution that Blockbuster was pondering last fall. Shackling consumers to a clunky and costly piece of hardware just won't fly, unless it follows the savvy path carved by Amazon when it teamed up with TiVo (Nasdaq: TIVO ) to deliver flicks directly into digital video recorders that folks already own.
A Blockbuster acquisition would be the best thing for Movielink at this point. Bankrolled by a consortium of movie studios that include MGM, Sony (NYSE: SNE ) , and Universal, it had ambitious intentions but came out too soon. The lively Rolodex of Tinseltown investors also proved to be a curse. Like the MusicNet and Pressplay digital forays by the major music labels, the actual content creators rarely have a clue as to what consumers actually want.
With early arrivals like Movielink and Cinema being pushed to the sidelines by e-commerce behemoths, consolidation may be the only way that these features stick around to watch the end credits.
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Longtime Fool contributor Rick Munarriz owns shares in both TiVo and Netflix. He also is an early adopter of both services. He is part of the
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