Vodafone set to buy Blinkbox from Tesco

1 Dec 2014

Barry Collins

Mobile network prepares to snap up Tesco's failing video-on-demand service

Mobile network Vodafone is reportedly set to buy Tesco’s video-on-demand service, Blinkbox. The two companies are apparently in advanced talks about the potential acquisition, according to The Telegraph. The report even suggests that Tesco may have to pay the mobile network to take the loss-making video service off its hands.

The sale of Blinkbox will raise doubts over Tesco’s entire technology strategy. The company’s Hudl tablets have been a surprise hit, especially the Hudl 2, which offers an exceptional specification for only £129 inc VAT. The tablet is something of a loss leader, used to push customers towards the company’s other online services. With Tesco now preparing to jettison the loss-making Blinkbox, it’s debatable whether it has any incentive to continue manufacturing the tablets or other hardware.

Tesco also offers eBooks and music streaming under the Blinkbox brand, although it’s not clear whether those two services are part of the proposed deal.

Tesco only last week revamped the Blinkbox video app for Android tablets and iPad, delivering offline playback for the first time. The company also expanded its range of content partnerships, giving Blinkbox customers access to a greater selection of movies, as well as some hardy perennials from the Channel 4 back catalogue, including The Inbetweeners and Peep Show.

For its part, Vodafone has been using third-party content to help sell its 4G packages. The mobile network offers subscriptions to Sky Now TV, Spotify or Netflix with some of its premium 4G tariffs. The move for Blinkbox would allow Vodafone to bundle streaming movies and television to its customers, without paying an external provider.

Vodafone is also believed to be preparing to enter the fixed-line broadband market. The Blinkbox acquisition would give it content services to rival those already offered by Sky (Now TV) and BT (BT Sport), amongst others.

The UK mobile market is currently in flux, with both BT and Three lining up bids for rivals EE and O2.