Blockbuster’s Download Plans Could Be Hard On Competition

Blockbuster (BBI) is in talks to buy movie download service Movielink. The plan has one gigantic flaw. It happens a year or two too late.

But, it is still not good news for Netflix (NFLX), Wal-Mart (WMT) and new companies beginning in the business like Joost. It may even have implications for YouTube’s (GOOG) efforts to get feature length content licenses from the large media companies like TimeWarner (TWX), Viacom (VIA), and CBS (CBS).

The reason the Blockbuster’s move may roil the rest of the download industry is that the company has so many subscribers through its stores and DVD mail service. The mail operation already has over two million members.

With Blockbuster coming into the market, the large content companies may actually be gaining leverage. The dog fight among download services allows them to place bets across multiple platforms and companies ranging from Apple (AAPL) to Netflix. No matter which companies win the download race, content companies have a new, large venue for making money.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.