Blockbuster unveils on-demand deal to transmit movies to TiVo users

NEW YORK -- Blockbuster's effort to establish itself in the fast-growing Internet video-on-demand business will get a boost today when the No. 1 video rental chain unveils a deal to transmit movies and TV shows to TiVo digital video recorders.

"This relationship with TiVo tivo is step one in getting to the places that consumers care about," says Kevin Lewis, Blockbuster's senior vice president for digital.

Later, he plans to offer Blockbuster OnDemand to Internet-connected Blu-ray players, televisions, mobile phones and portable entertainment products.

The deal should also help Blockbuster's effort to establish itself as a consumer electronics retailer. The chain will begin to sell TiVo DVRs beginning late this year when Blockbuster bbi videos become available on TiVos.

The companies declined to discuss financial details, including how many of Blockbuster's nearly 4,000 stores will sell TiVo DVRs. It's also unclear what movies might be available. "The studios and we are trying to figure it out," Lewis says.

The alliance comes at an important time for both companies. Blockbuster shares have fallen about 80% over the last 12 months, to 73 cents, as consumer interest in DVDs has flagged.

TiVo shares have dropped only about 22% to $6.98. But it's struggling to keep customers from switching to lower-priced DVRs offered by cable and satellite companies.

TiVo has 3.3 million subscriptions, its lowest number since 2005. The company hopes to turn that around by persuading cable and satellite providers to offer TiVo's user interface on non-TiVo DVRs.

Meanwhile, TiVo is trying to make its own DVRs stand out by adding Internet video, including movies from Blockbuster rivals Amazon and Netflix.

Virtually everyone in home entertainment is jockeying for position, with spending for online and mobile videos poised to soar to nearly $1.4 billion in 2012 from about $321 million last year, according to merchant bank Veronis Suhler Stevenson.

TiVo wants to offer "a complete television experience," says Tara Maitra, vice president of content and ad sales. Blockbuster's movie selection will be similar to Amazon's but different from Netflix's, which she says "has fewer new releases."

Lewis says Blockbuster hopes to offer "the hot new stuff, as soon as the studios allow us to sell it digitally," typically within a month after it appears on DVD.

TiVo owners who have Blockbuster accounts will pay up to $4 to rent a movie, most with DVD-quality images. Customers will have 30 days to begin watching; once they do, they can view the video as much as they want for 24 hours. It will cost as much as $20 to buy a movie, but digital-rights software will prevent it from being copied to a DVD.

About 750,000 of TiVo's DVRs are connected to broadband. The company expects that to soar as home networks grow.