Tesco buys movie-streaming site Blinkbox
Tesco has bought an 80% stake in movie-streaming site Blinkbox.
The video-on-demand service currently attracts around two million users a month.
Tesco plans to set up systems which combine the purchase of physical products with the use of online services.
"We can link physical purchase of a product to the building of digital collections in a new and seamless way," Tesco's UK head, Richard Brasher, said.
"We want to allow them to decide how they access entertainment content and on which devices, whether it's on PC, TV or tablet.
"Working with the Blinkbox team and our content partners, we will bring these compelling propositions to life for our customers."
The site, which launched in April 2008, gives members access to over 9,000 films and TV series via their PC, Mac, games console or other internet-enabled devices.
Customers can either pay for premium feature titles, or view ad-supported content for free.
"It's a hugely exciting time," said Blinkbox chief executive Michael Cornish, a former senior executive at Channel 4.
"This partnership represents another step forward, bringing the leading movie streaming service together with the UK's biggest retailer."
Tesco purchased its controlling stake in Blinkbox from Eden Ventures and Nordic Venture Partners.
In a joint statement, they said: "We congratulate Tesco on the acquisition of Blinkbox and are excited to be following the continued growth of the business under Tesco."
The BBC understands that there are currently no plans to relaunch Blinkbox as a Tesco brand.
The pair will face competition from the likes of LoveFilm, part of online retailer Amazon, which has around 1.5 million members.
Dan Cryan, head of broadband at analyst IHS Screen Digest, believes this is the first of several moves by Tesco to shift to providing a wider range of digital services in the future.
"Tesco have acquired a tried and tested platform for the delivery of movies.
"Their aim is to try and, at least in a short term, tie it into a physical product with a view to making sure they have a foot in the door when everything goes digital."
"It's a pre-emptive move on the part of Tesco to make sure they're still at the table.
"I think it's the first of a number of digital initiatives you'll hear from them within the year."