Tesco purchases e-book seller Mobcast for $7.1M

Tesco is getting ready to compete with Amazon and Barnes and Noble in the UK

Financial trends and news by Steven Loeb
September 4, 2012
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The domination of e-books is basically inevitable by now, but the business just got a shot in the arm now that one of the world’s largest retailers has acquired a leading e-book platform.

UK supermarket chain Tesco has purchased e-book platform Mobcast for £4.5 million ($7.1 million, 5.7 million euros), it was announced Tuesday.

London-based Mobcast has a catalog of over 130,000 titles. The e-book platform also offers cloud-based storage for its e-books. The company received the Best Mobile Book Company award at the Mobile Entertainment Awards in 2010.

Founded in 2007 by CEO Tony Lynch and bestselling author Andy McNab, the company has received an investment of £1m by Japanese firm For-Side.

“Since we launched Mobcast in 2007, we have been passionate about innovation, the digital book market and allowing customers to read across their devices. We are delighted the products that Mobcast has developed will now be used to introduce the joys of eBook reading to more book lovers in the UK,” Lynch said in a statement.

Tesco, which was founded in 1919, and is the third largest retailer in the world, after Wal-Mart and Carrefour. It currently operates 6,000 stores in 13 different countries.

Noting that the chain is “already one of the UK’s largest booksellers”, Michael Comish, CEO Tesco Digital Entertainment, said in a statement that, “Mobcast will help us offer even more choice for the large and growing number of customers who want to buy and enjoy books on their digital devices whenever and wherever they want.”

Tesco will have plenty of competition in the e-book market: Barnes and Noble announced last week that it will be offering its Nook e-readers to UK customers via a deal with UK department store John Lewis, while Amazon recently said that it would be launching its app store in the U.K., Germany, France, Italy and Spain. 

This is the third digital entertainment purchase for Tesco, after buying movie and TV streaming service blinkbox in 2011 and Internet radio service WE7 in June 2012.

The rise of e-books

Tesco is picking a good time to get into the e-book business, as it is about to boom.

A study back in April from the he Pew Research Center’s Internet & American Life Project found that a full 21% of respondents reported having read an e-book within the past year, as of February 2012.

To put this into perspective: in December 2011, just 17% of those surveyed had read an e-book in the past year. That was a jump of four percentage points in just two months.

How big is the market expected to become? A report in December from Juniper Research estimated that eBook sales would hit $9.3 billion in 2016 as compared to $3.2 billion in 2011.

Amazon said last month that for every 100 hardback and paperback book sold on its website, customers downloaded 114 e-books. Publishing house Bloomsbury revealed that e-book sales jumped 70pc year-on-year in the three months through May.

So it should not be a surprise that e-booksellers have not had problem raising money. For example, ebook publisher Hyperink raised $1.2 million in October 2011.

E-books have becomes especially popular when it comes to college textbooks.

In March of last year, digital textbook Inkling announced that it had raised a significant round of funding from McGraw-Hill and Pearson, two of the largest educational publishers in the world. In April 2011, Education software company Kno raised $30 million Series C round led by Intel Capital.

Earlier this week the California State Senate passed two bills that are designed to create a free open digital textbook library for students.

Mobcast and Tesco were unavailable for comment.

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