Netflix, which pioneered online DVD rentals five years before Blockbuster got into the business, announced its "Watch Now" downloading option in January. Wal-Mart Stores Inc., Amazon .com Inc., Apple Inc. and Starz Entertainment Inc. also have started versions of download and streaming video services in the last year.
Downloads are still a tiny part of the video business. Spending on Internet rentals and download-to-own movies amounted to an estimated $55 million last year, according to Parks Associates, a Dallas-based market research firm.
"We don't think movie downloading is going to take off while it still faces so many challenges. Most studios aren't willing to give up DVD revenues yet," said Michael Cai, director of broadband and gaming for Parks Associates.
Mr. Cai predicted the download market won't top $1 billion until 2009, after more content and bandwidth are available and pricing comes down.
"If it is an exploding market, why do the studios want to sell Movielink, and why has it taken so long to find a buyer?" he asked.
Blockbuster and Movielink held talks once before, in 2005.
From the article "Blockbuster may acquire Movielink," by Maria Halkias
