Supermarket Sainsbury’s has spent £1m cash on online entertainment company Global Media Vault (GMV), snapping up the lossmaking business in order to move further into a market where it sees strong potential growth. The deal gives it a ready-made platform to increase its digital entertainment capabilities.
Sainsbury’s was previously the main customer for GMV, a white label business with its own entertainment ecommerce and digital media platform, and part of the MBL Group. Since GMV began trading in January 2009 it has developed an entertainment ecommerce and digital media platform with a digital database of more than three million assets, including music, films and games for the UK market, that can be browsed, bought and distributed through web, mobile, TV and kiosk applications. However, in its last financial year it was loss-making and its liabilities were approaching £4m.
The supermarket launched the Sainsbury’s Entertainment website in 2010 and says this acquisition will allow it to offer customers digital content to buy, rent or stream content. It says the UK entertainment market is currently worth £7.3bn, and that the digital and online part of that is growing fast and expected to double in value by 2015.
Luke Jensen, Sainsbury’s group development director, said: “Online retailing and the delivery of digital content will play a key role in the future of entertainment so this is an important acquisition for Sainsbury’s. Taking full control of GMV will enable us to develop our existing Sainsbury’s Entertainment website even further, enhancing the functionality and customer experience and meaning customers will soon be able to buy, rent or stream content from Sainsbury’s.”
He said the buy represented “a significant time saving” compared to building its own platform from scratch. Jensen said: “Securing this platform for Sainsbury’s Entertainment shows how we are constantly looking to innovate and seize opportunities that will support the future growth of our business.”
Sainsbury’s is buying the business from home entertainment distributor MBL Group, which will use the proceeds to boost its working capital. In the year to March 2011, MBL said today, Global Media Vault lost £2.9m before tax and had liabilities of £3.9m.