Sonic Solutions is set to merge CinemaNow into its DVD-burning division, after agreeing to acquire the US-based online video company.
Although the companies did not announce the terms of the agreement, Variety values the deal at USD3m. The amount is much smaller than the USD6.6m Blockbuster paid for Movielink last year, reflecting CinemaNow's struggle to turn a profit.
According to Sonic, CinemaNow generates between USD1m to USD1.2m on expenses of USD1m to USD1.5m. The company offers content from production giants such as 20th Century Fox and Disney but has failed to grow against competition from YouTube and Hulu. CEO Curt Mavis left the firm earlier this year to move to Lionsgate, one of CinemaNow's backers.
Sonic Solutions, which makes digital software, will now merge CinemaNow with its Qflix DVD burning division to form a new Premium Content Group. The division will be led by Mark Ely, Sonic's exec VP of strategy, who will focus on embedding CinemaNow into PCs and electronic devices and expanding the adoption of the Qflix technology platform. Sonic says the acquisition will close "shortly".
Launched in 1999, CinemaNow offers movie downloads and its technology is embedded into devices from Dell, HP and Samsung. In total, it has received more than USD40m in VC funding from investors such as Lionsgate and Echostar.
Sonic publishes professional software used to author DVDs and Blu-ray titles. It also creates software for the consumer market, including DVD Decoder and Easy Media Creator.
StrategyEye's related companies: EchoStar Communications, Sonic Solutions, Disney-ABC Television Group, CinemaNow, Inc., Movielink LLC, Blockbuster, Hulu, Lions Gate Entertainment, YouTube, Twentieth Century Fox Film Corporation
