Tesco Joins The Battle For The Living Room

This is getting interesting. While Netflix is scaring the living daylights out of operators and rights holders in the US, on this side of the pond the battle to control the living room took a new twist with the announcement that Tesco is acquiring 80% of video-on-demand aggregator Blinkbox. Thus the UK’s most successful physical retailer - £1 in every £8 of UK consumer spend is with Tesco -  is set to compete head-to-head with the most successful online retailer, Amazon, which earlier this year took full ownership of Europe’s largest online DVD rental provider, LOVEFiLM.

Blinkbox is a canny company that has spent the last few years solidly acquiring pay-per-view video rights. Its execs are people the studios and broadcasters can do business with, and it has gone about its business quietly and efficiently. It looks like a good fit for Tesco, although the retail giant may yet keep its own white-label online DVD rental business, powered by LOVEFiLM.

There’s a compelling logic to this development: While media companies have been agonizing about the best way to make money from paid digital content, perhaps the best way is to ask those whose whole business is about selling stuff. And while at Forrester we regularly implore our clients to focus on understanding their consumers, that imperative is at the heart of the success of both Tesco and Amazon.

For the consumer, this could be good news, if it helps bring choice to the UK VoD market, especially on the proposed YouView platform, on which both LOVEFiLM and Blinkbox will be offered. For content owners, this opportunity to reach more consumers will be tempered by the knowledge that Tesco’s buyers are famously hard-nosed. For operators and broadcasters, this is an opportunity missed, and gives momentum to an unwelcome new competitor in the UK VoD market.

But this has implications beyond the UK, not least because the market here looks like becoming a testbed for global players with ambitions to own our living rooms.  It’s not just Tesco and Amazon that are looking to grow across Europe and Asia; look at the other companies with a stake in this impending battle, for whom Tesco’s announcement will be another wake-up call: Apple, Microsoft, Google, Facebook, Yahoo!, Samsung, Sony, and Netflix, before we even get to the movie studios, the broadcasters, and the telcos. I told you this was getting interesting.