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TiVo: the next video store?

Blockbuster recently announced a deal it has struck with TiVo to make its digital movie library available over the Internet to televisions with TiVo digital video recorders. The two companies are planning a joint marketing campaign that will jumpstart the project sometime in the second half of 2009.

The move is the most recent attempt from Blockbuster to compete with its biggest adversaries, Netflix and Amazon, both of which have already struck similar deals with TiVo to provide their digital video services via the internet. While it may have come a little late, officials at the company are still confident.

“We are excited to be teaming with TiVo, the company that created the DVR, to make Blockbuster’s entertainment content readily available to their millions of subscribers,” Jim Keyes, chief executive of Blockbuster, said in a statement. “Ultimately, our vision is to work with TiVo so that their subscribers can access movies not only through our OnDemand service but also from our stores and through our by-mail service as well.”

The OnDemand service will be offered only to an estimated 800,000 subscribers who have broadband Internet connected directly to their TiVo boxes.

While there will be no money exchanged between the companies, Blockbuster has stated that it will sell TiVo boxes in many of its 4,000 stores across the U.S. and on its Web site. It will take the usual retailer’s percentage from these sales.

Netflix has been the biggest threat to Blockbuster in recent years with its DVD mail service, cutting into a large amount of the company’s profits. Netflix charges a monthly fee based on the amount of DVDs a person can have in his or her possession at one time, ranging from one to eight. These titles can be selected from a reported 100,000 available. Also, depending on the plan, each renter may also have access to unlimited DVD exchanges each month.

For its OnDemand service, Blockbuster will most likely charge $3.99 for new releases and $2.99 for old releases for a 24-hour period. It will also have a much more limited selection of somewhere between 5,000 and 10,000 movies available at any given time, as compared to Netflix’s roughly 12,000 free online titles available. Officials say, however, that Blockbuster will be offering many more new releases, whereas the free titles Netflix offers are often several years old.

According to Kevin Lewis, senior vice president of Blockbuster’s digital business division, the deal with TiVo is the first of many offers that the company will make with major consumer electronics companies.

“Typically, you will find that consumers reward and appreciate companies and technologies that take an open approach to business,” said Joe Miller, TiVo senior vice president, “and that is what we are doing here.”

Lewis hinted that Blockbuster may also collaborate with Apple Inc. in the future. If this becomes a reality, Blockbuster will most likely put its service on Apple TV, a service that puts movies downloaded from iTunes directly on a TV.

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