Blockbuster aims beyond stores with TiVo deal

Wed Mar 25, 2009 12:01am EDT

 * TiVo users able to download videos from Blockbuster
 * Latest deal expanding Blockbuster beyond stores, website
 * Blockbuster to sell TiVo recorders in stores
 By Franklin Paul
 NEW YORK, March 25 (Reuters) - Blockbuster Inc BBI.N
plans to let TiVo Inc (TIVO.O) subscribers download movies to
their home televisions from its online movie library, in the
latest deal aimed at broadening the brand to computers and
other gadgets.
 Under the deal announced on Wednesday, most TiVo users with
high-speed Internet service will be able to view movies offered
by Blockbuster's On Demand system. Blockbuster joins rival
Netflix (NFLX.O) and Amazon.com (AMZN.O), which also provide
online video straight to TiVo users' TVs.
 The agreement also calls for Blockbuster's brick-and-mortar
stores and online shop to sell TiVo's digital video recorders,
potentially exposing both companies' customers to the other's
services. Financial terms of the deal were not disclosed.
 For Blockbuster, the deal responds to the growing appeal of
movie and video watching on computers, handheld devices, or in
home living rooms via set-top boxes or video game consoles.
 "You will see us in a large number of other devices going
forward," said Kevin Lewis, senior vice president of digital
entertainment at Blockbuster, who added that the company also
plans to makes its system available to Apple Inc's (AAPL.O)
products. "We need to be in the normal places that consumers
want to watch movies," he said.
 Lewis noted that any threat that expansion in online
services poses to physical stores is overshadowed by the need
for consumers to see Blockbuster as the premium brand for movie
viewing.
 "The challenge of being a multi-channel retailer is you no
longer can think only about the impact on the other leg. You
have to think about what the consumer wants," he said. "We are
the only (company) in the works that can deliver (via) stores,
digital downloads, kiosks ... across all these channels."
 About 10,000 movies will be available when the service
launches in the latter half of this year. Most rental films on
Blockbuster.com today cost about $2 to $4, while purchased
movies start at less than $10.
 Blockbuster claimed that its roster of movies on TiVo will
outshine that of online choices available at Netflix and Amazon.
Indeed, while Amazon and Netflix have more videos available in
total, most are older titles, whereas Blockbuster.com offers
many more recent hits.
 On TiVo, once a video is selected, it begins to download to
the set-top box, and can be watched even as the movie is being
delivered over the Internet.
 The deal beefs up the rosters of audio and video content --
including YouTube videos and Rhapsody music -- that TiVo offers
its fee-paying subscribers. The company hopes to differentiate
from generic DVRs offered by cable, phone company and satellite
TV companies -- sometimes at a steep discount to TiVo's
service.
 That's important since the company's subscriber growth has
suffered, and, excluding the benefit of a legal windfall, it
barely eked out a profit last year. Still, TiVo is bolstering
its subscriber base with new Comcast (CMCSA.O) customers, and
hopes to win a patent case with EchoStar (SATS.O) that may
result in some kind of amiable partnership.
 In addition, it is adding new content services that keep
current TiVo users loyal, and possibly draw in others.
 "One area that we have to do some more exploring is
sports," said Tara Maitra, vice president of Content Services
and Ad Sales at TiVo.
 (Reporting by Franklin Paul, editing by Matthew Lewis)