May 18, 2011, 12:37 PM

Tesco buys into the glitter of movie streaming

Tesco acquires an 80% stake in Blinkbox.com in the U.K.

Mark Brohan

Research Director

Lead Photo

Tesco Plc, one of the biggest online grocery and discount mass merchandise retailers in the United Kingdom, is moving into digital content.

Though Tesco, No. 3 in the Internet Retailer Top 300 Europe, didn't provide specific financial details, the web and multichannel retailer has acquired an 80% stake in Blinkbox.com, a digital entertainment company with a base of about 2 million users in the U.K. and a catalog of 9,000 movies and TV shows.

“The acquisition positions Tesco for the next stage in Internet-driven home entertainment,” says Tesco CEO Richard Brasher. “The acquisition of Blinkbox.com, together with a range of other services currently in development, means we can link physical purchase of a product to the building of digital collections in a new and seamless way.”

Tesco acquired its stake in Blinkbox.com from Eden Ventures, a British venture capital firm, and Nordic Venture Partners, an investment banking group based in Denmark. Blinkbox was launched in 2008. “This partnership represents another step forward, bringing the leading movie streaming service together with the U.K.'s biggest retailer,” says Blinkbox.com CEO Michael Comish.

Tesco, which grew web sales about 14.7% to 2.41 billion pounds (US$3.89 billion) in fiscal 2011 from 2.10 billion pounds (US$3.39 billion) in fiscal 2010, didn’t say if it will acquire all remaining shares of Blinkbox.com.

Tesco is the second example of a major player to acquire all—or a majority stake—of a digital entertainment company in the U.K. in recent months. In January, Amazon.com, No. 1 in the Internet Retailer Top 500 Guide, acquired LoveFilm International Ltd., a London-based video rental and streaming company with 2009 sales of about $158.8 million. Terms of the deal weren’t disclosed.

 

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