Remember Blockbuster? You know, you’d rent a movie and then when you had to return it, you dropped it in that funny mail slot outside the store? It just announced, at long last some would say, that it’s partnering with TiVo to bring its online OnDemand service to set-top boxes. And the company also wants to put Blockbuster content on Apple devices.
Blockbuster’s business has been languishing (it reported a loss of $359.7 million for the recent quarter) for a number of reasons–downloadable movie content and a slipping economy for two, both of which have stripped the company of core customers–which is of course why it’s making this move in an attempt to stay relevant.
It’s a reciprocal arrangement, as you may expect–Blockbuster gets to serve up its “extensive library of digital content” to the legion of TiVo users, while TiVo units will go onsale at Blockbuster stores in an attempt to achieve a broader subscriber base for the system. As Blockbuster’s chairman Jim Keyes puts it, “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.” TiVo’s CEO Tom Rogers frames the deal thus: “Joining with Blockbuster further distinguishes TiVo as a true universal solution for content providers, making it a one-stop shop for any content through broadband or linear distribution straight to the TV.”
Fascinatingly, both bits of PR spin reveal exactly the problem facing Blockbuster. Back when it was a revolutionary global video and DVD rental chain, the company peaked at opening one new store every seventeen hours. But as technology and people’s tastes began to change, the company’s business model became less relevant. The much more convenient (from a consumer’s point of view) mail-in service from companies like Netflix really took a chunk out of the company’s customer base, and over the last several years Blockbuster’s been posting financial losses.
Now that Amazon is offering HD movie content over Tivo, as is Netflix, Blockbuster was lagging behind–something that Kevin Lewis, senior VP of digital entertainment at the company, notes: “We need to be in the normal places that consumers want to watch movies.” It also thinks that despite being late to the party, it’s got a stronger offering than either Amazon or Netflix. Its catalog of 10,000 movies is less than the other two’s total, Blockbuster’s focus is on much newer movies and thus may be more tempting to subscribers.
Lewis also mentioned that Blockbuster wants its service on Apple devices too, which makes perfect sense given Apple’s enviable position as a top digital content provider for music and movies. Presumably Lewis is referring to Apple TV, which serves movies downloaded from iTunes directly to a TV. But it’s confusing if true. There’s been no word from Apple about the deal yet, so we can’t say if it’s aimed at Apple TV or more exciting things like the iPhone, and adding Blockbuster content to iTunes would set up direct competition to Apple’s own downloadable movie offerings. Apple recently reaffirmed its interest in this part of its business by offering HD movies for rent and purchase. It’s possible Apple could undertake some form of revenue share with Blockbuster, but we’ll have to wait for official word from Cupertino for the real details.
However good this move is for Blockbuster, it’s certainly going to be a great time to be a TiVo user, and possibly an iTunes subscriber too.