Digital Delivery: Blockbuster's Bankruptcy Signals Shift to Online Video Streaming

September 23, 2010 — -- The announcement that famed movie rental warehouse Blockbuster is filing for bankruptcy shows a major shift in the movie rental world.

"Blockbuster is still tied to the world of physically distributed goods and media," said Jim Willcox of Consumer Reports. "The landscape has completely changed. There's a lot more competition and a whole generation of people who are very,very comfortable without packaged media."

Willcox said that along with Netflix, which brought the convenience of movies being delivered directly to your home, the advent of online streaming has hurt video rental stores.

"It used to be a pretty bad experience to stream movies when people had dial-up modems, but the expansion of broadband connection in homes has enabled a lot of services," Willcox said.

Those services include everything from Apple TV to your child's Wii. Many of these devices cost under $200. Here's a quick breakdown of some of the technologies reinventing the way you watch movies.

Netflix: This service, which first let you rent a movie without leaving your couch, now lets users stream videos on their computers as well at no additional cost. Paul Dergarabedian of Hollywood.com said that "between the streaming and the ability to get those movies delivered to your door and including Blu-Ray, that's kind of an irresistible combination."

Vudu: Vudu is an on-demand movie service that you can use if you have a Blu-Ray player or high definition television. It's built into products produced by LG, Mitsubishi, Toshiba, Samsung, Sanyo, Sharp, and Vizio. Willcox from Consumer Reports said that of all the services that help you stream videos, this one produces the best picture. It has a format called HDX which comes the closest to looking like high definition video.

Apple TV: Earlier this month, Apple unveiled a smaller, cheaper version of Apple TV, the set-top box that connects to a high-definition television and can show rented movies and TV shows. The movies and TV shows are either streamed from Apple's own service or from Netflix. Apple TV can also stream YouTube clips and allow you to look at photos on Flickr. When it first launched in 2007, people weren't comfortable yet watching movies online, Jobs told The Associated Press earlier this month, and the gadget wasn't a big hit.