Tesco Exits E-Books, Transfers Blinkbox Books Customers To Rakuten’s Kobo

Some closure in the ongoing story of retail giant Tesco offloading its digital content effort blinkbox. Assets from blinkbox Books — specifically customer accounts and existing e-book libraries — are being picked up by Kobo, the e-book division of Japanese e-commerce giant Rakuten. Blinkbox customers yesterday started to get emails informing them of a transition, and Tesco and Kobo have now both confirmed the details to us directly.

“We will work together with Kobo to transition users’ libraries to the Kobo service, ensuring they continue to have access to their previously purchased books and have the option to buy new ones from Kobo,” a spokesperson for Blinkbox tells us. “Those who access blinkbox Books on a Hudl [Tesco’s low-cost tablet] will be able to install the free Kobo reading app on their device. We will be communicating the timelines for the transition in due course.”

And, unlike a similar customer transfer made between Deezer and AT&T in the U.S. when AT&T decided to close Cricket’s Muve music service, Tesco confirms there are no financial terms for this transaction: Kobo is picking up the assets to provide continuity of service to existing users.

Blinkbox Books has only 100,000 customers, the company tells me — a mark of the challenges that Tesco faced in the e-books market.

The email blinkbox has sent out to customers provides a bit more information about the transition. Customers with blinkbox e-books will see their book assets transfer over to Kobo in the next two to three weeks. Those who have credits or accounts but have not purchased any books are being asked to create new accounts with Kobo by February 28, but Blinkbox credits will not be transferred, according to this FAQ.

Following declining sales and an accounting scandal in Tesco’s core retail business, the sale of e-book assets to Kobo is the latest chapter in the dismantling of blinkbox.

Earlier this week, Tesco sold blinkbox’s music division to Australia’s Guvera. Earlier this month, Tesco offloaded the video assets to UK broadband provider TalkTalk. Originally Tesco was going to shutter the books division altogether after an alleged deal with Waterstones reportedly fell through. Then, Kobo stepped in late as a transition partner.

It’s a whimper of an ending to Tesco’s ambitions to square up to e-commerce giant Amazon.

Blinkbox Books first got its start in 2012, when Tesco acquired e-book seller Mobcast for $7.2 million, which it then rolled into a bigger blinkbox music, books and video effort in 2013. Later that year, it unveiled its own cut-price Android-based device, the Hudl, to complete the Kindle effect.

The logic for Tesco was to focus on new areas of commerce to complement and drive more sales in its core retail business: supermarkets in the UK and beyond.

But with all of the pressure on the larger retail operation, Tesco has had to rethink its investments in new wave businesses.

It is reportedly also reassessing other tech investments, including a potential sale of its ad and marketing-tech division Dunnhumby for around £2 billion ($3 billion). It’s not clear what will happen with another major area of tech investment for Tesco — a partnership with Berlin’s Rocket Internet to invest in e-commerce operations worldwide, including a $250 million investment into Lazada.

For its part, Kobo has also been working hard to position itself as a viable competitor to Amazon.

In addition to the Kobo bookstore with 4 million titles, it makes e-readers and tablets based on Android. And within that it’s been quietly picking up other users by way of consolidation, also striking a deal with Sony to migrate its e-book users when Sony shut down its Reader Store in March 2014. For now, it looks like Rakuten has more patience with Kobo than Tesco did with blinkbox to see if it can do the job.

Updated with comment from Kobo.