September 11, 2012, 10:49 AM

Sainsbury’s adds movies to its growing digital entertainment business

The U.K. mass merchant will launch a full service later this year.

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Multichannel British grocery and mass merchandise retailers apparently have a big appetite for digital entertainment services. In the wake of Tesco Plc., No. 3 in the Top 400 Europe acquiring Mobcast, an electronic book platform provider, for an undisclosed amount last week, J. Sainsbury Plc., No. 11, also is adding to its expanding digital entertainment business.

Sainsbury’s has signed a deal with Rovi Corp., a California digital entertainment platform provider, to use Rovi’s technology to launch a digital movie and TV download service before the end of the year. Terms of the deal weren’t disclosed and Sainsbury’s has yet to set a launch date. But the technology from Rovi will enable Sainsbury’s, which generates annual online sales of about $1.27 billion and fulfills 165,000 web grocery orders each week, to offer subscribers access to large digital entertainment library of movies and TV shows. “On demand streaming video is an exciting addition to our existing online offerings, and supports our customers as they progress from consuming content on physical discs to accessing their favorite entertainment on a range of devices, where and when they choose,” says Sainsbury group development director Luke Jensen.

Under the arrangement Rovi will provide Sainsbury’s with its DivX Plus streaming technology and help with content licensing, management, and marketing services. The technology deal is the latest in a flurry of recent moves by Sainsbury’s to build out its digital entertainment business. In June Sainsbury’s bought a 64% stake in online electronic book retailer Anobii for a nominal fee of 1 pound ($1.56) from beleaguered music and entertainment media retailer HMV. Sainsbury’s says the acquisition is part of its strategy to sell shoppers electronic books and other digital content.

“This acquisition is a valuable addition to our digital portfolio and shows our commitment to becoming a key player in the digital entertainment market,” says Mark Bennett, Sainsbury’s head of digital entertainment. “It further demonstrates how we are constantly looking to innovate and seize opportunities that will support the future growth of our business.”

In May 2012 Sainsbury’s also launched a digital music service with a library of 2.3 million titles and in October 2011 completed its acquisition of Global Media Vault Ltd, a digital entertainment platform provider, for about $1.6 million. “The moves reinforce Sainsbury’s entertainment strategy and complements its rapidly expanding digital entertainment lineup that already includes music and electronic books,” Jensen says.

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