The Wall Street Journal says the purchase price for Movielink was less than $20 million.

Movielink was started in 2002 by joint venture of Metro-Goldwyn-Mayer, Paramount Pictures, Sony Pictures entertainment, Universal Pictures and Warner Bros. Studios. Movielink was an effort by the studios to combat pirated movies. It’s estimated that the studios poured $100 million into the movie service but had difficulty attracting traffic.

"The studios’ goal with the Movielink service has always been to make digital entertainment content more conveniently, more widely and more securely available to consumers. This acquisition should further that goal," said Jim Ramo, CEO of Movielink
 
"With Blockbuster’s ability to leverage its store network, online assets, and marketing expertise, Blockbuster should be able to grow the market for digitally-delivered entertainment content, and we believe that’s good news for consumers and content providers alike."

 Blockbuster said it plans to eventually make parts of the Movielink service available through its Web site. Blockbuster’s latest move is an effort to further compete with Netflix, which launched its Watch Now service back in January of this year.

"Blockbuster is committed to keeping pace with the changing needs of customers by offering them an expanding array of convenient ways to access entertainment content," said Jim Keyes, Blockbuster Chairman and CEO. "

"Our acquisition of Movielink, with its associated digital content, is the next logical step in our planned transformation of Blockbuster."

Per the agreement, Movielink licensed Sonic’s DVD-on-Demand technology for the download offering. Also, Sonic will include the Movielink Service in its Roxio CinePlayer and other video software.

“We are anticipating an industry resolution to establish rules for converting secure Internet-delivered Movielink downloads into a secure format compatible with DVD players in the market today,” said Jim Ramo, CEO, Movielink.

“This gives consumers a more flexible product while providing copyright holders with adequate protection of their content. Our relationship with Sonic is a critical advancement and will enhance the value of our service, along with the capabilities already available, by allowing customers to burn and playback movies on standard DVD players.”

Though the deal, Movielink is hoping to take on not only traditional DVD sellers and offline rental establishments like Blockbuster, but is also taking aim at online rental services like NetFlix by taking out both the necessity to go to the video rental store and to await movie rentals or purchases by mail.

“By working with Movielink, the leader in broadband movie downloading, and allowing users to download, purchase and burn movies to DVDs, we are combining the flexibility and convenience of Internet video distribution with the permanency and portability of the DVD video format,” said Jim Taylor, senior vice president and general manager of Sonic Solutions’ Advanced Technology Group.

The companies will also cooperate on a joint marketing strategy.

Sonic has developed and licensed to Movielink a new module for AuthorScript called AuthorScript DVD on Demand, which includes digital rights management (DRM) protection to secure DVD content during the download process. Sonic uses Extensible Media Protection Architecture (XMPA) that allows studio-approved copy protection mechanisms to be applied to DVDs as they are being burned.

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According to sources familiar with the matter, the company is also expected to announce that it has closed a new round of funding, continuing the backing of Rob Hayes of Omidyar Network, Japanese search partner Mitsui, as well as a new Chinese partner. Added to the list of investors is former Google employee Aydin Senkut, who was once in charge of Google’s strategic syndication business in the Asia-Pacific region.

Redlitz denied rumors of layoffs and struggles within the company citing the new funding the company had procured and Feedster’s aggressive maneuvering into the Asian market. He implied that the company’s recent off-shoring and restructuring may have been confused with downsizing and financial troubles.

“Feedster has changed the structure of the organization to include an Australian development team. This is a group that came in with Brent Whitney, the VP of engineering,” he said. “Brent has a great background in building scalable systems and using outsourced talent.”

A source familiar with the Feedster’s restructuring told WebProNews that Whitney’s Australian recruits were part of a small team with PhD pedigrees brought in to work “on the spam problem.” The source also said that because of competition in the United States, and especially around Silicon Valley, Feedster was forced to look abroad for talent.

” There are some pretty sexy search companies in our neighborhood and it’s difficult to recruit,” said the source. Google especially has had a reputation for attracting the top talent in the industry, luring them even away from Microsoft.

Redlitz did not disclose the name of the startup company he would join, but indicated that it would be in the realm of media and advertising, which matches his background.

” I have been with the company two years, and brought in new talent to carry through with the original vision of quality search and syndication,” he said.

“I continually seek new opportunities around media and advertising, and the new company that I am joining is on the forefront of both. This is part of Silicon Valley and the start up environment. Change is constant.”

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Companies like Apple and Microsoft should be happy with the announcement from six Hollywood studios that movies will go on sale for download this week. The terms of usage for movies downloaded from MovieLink or CinemaNow can only be played on a television if it his connected to a home network, a CNN report said.

Well, maybe not Apple. Visiting MovieLink with a non-Internet Explorer browser throws the site into a paroxysm of digital rage. “Sorry, but in order to enjoy the Movielink service you must use Internet Explorer 5.0 or higher, which supports certain technologies we utilize for downloading movies. Click here to get the latest version of Internet Explorer.”

We think MovieLink and its supporting studios, Warner Bros., Universal Pictures, Sony Pictures, Paramount Pictures, Twentieth Century Fox and MGM, read SecurityProNews.com from time to time. They may wish to discover some reasons why IE may not be the browser of choice for some users.

CinemaNow, supported by Lions Gate and Sony (in a bit of bet-hedging on the latter’s part), at least renders its home page in Firefox and Opera browsers.

Pricing for downloadable videos ranges from $20 to $30 for the newest releases. Older titles are supposed to be available at a lower cost. It isn’t known what constitutes an “older title” in Hollywood mind-speak; for all we know Nosferatu could be the only film that qualifies.

Once a film has been purchased and downloaded, the user may create one backup copy for archival purposes, and that’s it. The copy cannot be viewed on standard DVD players. At least, not until DVD Jon releases a “fix” for that issue.

When considering that movies may only be viewed on a networked TV, it may be too soon to say this helps Apple as much as it does Microsoft. Both companies make media center software, Apple with Front Row and Microsoft with, well, Media Center. MovieLink’s system requirements list IE 5.0 or higher and Windows 2000 or XP.

That leaves Apple, its Mac mini, and Front Row out in the cold. And, it may irritate potential purchasers who own vehicles equipped with DVD players, like several minivan models.

Hollywood does not want to cannibalize DVD disc sales, and rightly so. The industry profits mightily from those sales. But how much could it make with a more generously priced online delivery model, where people could purchase just the movie with its restrictions for a lower price or choose the feature-filled DVD version at current rates?

The MPAA probably will never let us find that out.

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David Utter is a staff writer for WebProNews covering technology and business.