TalkTalk Group today announced its acquisition of Blinkbox Movies, Tesco’s failed attempt to compete with Netflix in the TV and movie market.
The price is reported to be in the region of £5 million — a tiny sum which indicates just how big a failure this business has been for Britain’s biggest supermarket. Blinkbox lost nearly £25 million in 2013.
The move will serve as one of those business school case studies that warns old, brick-and-mortar companies — like groceries that sell milk and frozen food — how dangerous it is to jump into businesses they know little about.
Blinkbox may fare better at TalkTalk, where its services can be wrapped into the broadband provider’s existing TV business, which has 1.2 million customers.
It’s a huge bargain for TalkTalk: The company just spent small change to acquire a movie-streaming company with 400,000 paying customers a month, a well-known brand name, plus Tesco’s broadband and fixed-line voice customer bases, which have 75,000 and 20,000 users, respectively.
And it means that TalkTalk is now one of three companies in the UK with the ability to offer quad play packages in the UK — the others being Virgin Media and BT, once its acquisition of EE is complete.
For comparison, BT is spending £12.5 billion to put its EE quad play package together. (The two companies aren’t comparable, of course, but the price differential is interesting in the sense that both sets of companies have now ended up in competing positions for very different acquisition costs.)
“It’s an exciting time — the premise behind this is quad play,” the company spokesman says. “We’re in a position to offer a massive range to customers. Going forward, yes, it could be big. We’re able to compete with Virgin.”
Blinkbox CEO and cofounder Adrian Letts will join TalkTalk as managing director for TV.
The spokesman explains: “With TalkTalk it will be integrated into its TV service. The idea is to bring in the technology and smart people already there. It means there’ll be a whole package that can accelerate an established service. We already have a strong TV service so it’s about adding to that.”
He continues: “TalkTalk is the fasted growing TV platform and it’s flexible: It’s about paying what you want, on demand. The company is far better equipped to run it with its strength and capability.”
TalkTalk’s TV strategy is aimed at Freeview homes primarily, people who “would like a little more content”. But it will also be able to provide pay for content including Sky channels — without the subscription. It means customers can buy Sky Sports on demand rather than sign up to lengthy contracts. This comes in addition to the core movies base, which has around 20,000 films and TV shows to buy or rent.
In terms of offering full quad play packages — TalkTalk doesn’t own a provider outright — the spokesman says its mobile service essentially operates as any other 4G mobile phone network. He says the company works with Telefonica to give its customers “the same as a mobile network provider without actually owning a company”.
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