Digital Media

Broadband-connected TiVo DVR subscribers have access to Blockbuster's long-awaited OnDemand rental service, TiVo announced on Tuesday.

The service is available to owners of TiVo Series2 and TiVo Series3 digital-video recorders (including the TiVo HD and TiVo HD XL).

According to the company, users will be able to stream films ranging from new releases to classics. Users will be charged $2.99 for classic hits and $3.99 for new releases. Blockbuster will be adding more films over the coming weeks, including "select HD titles."

As part of the agreement, Blockbuster will also begin selling TiVo DVRs in "thousands" of participating Blockbuster stores around the United States.

Blockbuster OnDemand's arrival on the TiVo (and TiVo's arrival in Blockbuster stores, for that matter) has been a long time coming. The partnership was first announced in March.

Whether Blockbuster will enjoy success on the TiVo is up for debate. The company's main competitor, Netflix, is already streaming films and television shows to TiVos for no additional fee beyond the company's unlimited-plan charges. Amazon Video On Demand is also available to TiVo users, and like Blockbuster, it, too, allows them to purchase individual videos, rather than pay a monthly subscription fee.

TiVo owners can also access content from YouTube, as well as films through Jaman and CinemaNow's Disney.

To access Blockbuster OnDemand, users will first need to create a Blockbuster account. Once complete, they can access Blockbuster OnDemand content from the TiVo's video-on-demand menu.

Reed Hastings, Netflix CEO

(Credit: Netflix)

Although it has no immediate plans to do so, online video rental service Netflix is hoping to bring its video-streaming service to Sony's PlayStation 3, Nintendo's Wii, and Apple's iPhone, CEO Reed Hastings said in a recent interview with Reuters.

Hastings told Reuters that his hope is that Netflix's streaming service will eventually "be on all the game consoles, all the Blu-ray players, (and) all the Internet TVs." But as Hastings pointed out, his company has signed a deal with Microsoft to deliver Netflix streaming exclusively to the Xbox 360 in the video game space.

The chances of that changing anytime soon are slim, though Hastings said his company is "working in parallel" to achieve his goal of bringing Netflix streaming to all the aforementioned devices. While Netflix is likely to offer such a service on the iPhone and iPod Touch "over time," he said there is little chance of Netflix video streaming becoming available in the App Store "in the short term."

Despite rumors indicating that a Netflix app is already on its way to the App Store, Hastings would not give a timetable: "(With) movie watching, we are not focused on mobile yet, but (instead) on the TV, on Blu-ray, and on the video game consoles. We will get to mobile eventually, including the iPhone."

Hastings also chimed in on the recent announcement that Blockbuster might be closing up to 960 retail locations. He told Reuters that the closures "don't really benefit" Netflix.

Netflix's focus, Hastings, said, is on streaming video and maintaining a big catalog of available titles. Blockbuster, he said, "competes on doing the inexpensive new releases." He said Redbox would be the company that would benefit most from the closure of Blockbuster stores.

After inking a deal with Samsung last month to deliver movies directly to your home, Blockbuster announced on Tuesday that its OnDemand service is also coming to your mobile phone.

Blockbuster OnDemand, to be available on "select" Motorola mobile phones, will provide users with access to "thousands" of films, the company said in a statement. Users of the upcoming application, whose release date is yet to be announced, will also be able to choose films for home delivery or reserve titles for in-store pickup.

According to Blockbuster, the Motorola deal is yet another element in its strategy of providing consumers with options to get its movies anywhere, at any time.

For its part, Motorola believes that offering Blockbuster movies on its handsets will help it regain some of its appeal. The company once sat atop the mobile-phone industry. Today, it's a shadow of its former self. And it's trying desperately to regain some market share.

That might be coming through Android-based devices. Motorola has already signed on to deliver Android phones. Blockbuster's app might become a component in that strategy. But by competing with the iPhone and its many multimedia capabilities, Motorola and Blockbuster will be facing an uphill battle.

(Credit: Blockbuster/TiVo)

Blockbuster will become the latest Internet video-on-demand service to appear on TiVo DVRs.

The two companies announced late Tuesday that they are working to make Blockbuster's service available on all TiVo Series2 and Series3 DVRs (including the HD and HD XL models) in the second half of 2009.

The announcement marks the first non-PC device to support both Blockbuster OnDemand and its archrival, Netflix. TiVo DVRs also support Amazon Video On Demand, YouTube, Jaman, and some Disney movies via CinemaNow.

In addition to Blockbuster's online video service being available on TiVo, Blockbuster will sell TiVo hardware at its stores. The companies will also launch a joint marketing campaign. Blockbuster, meanwhile, already offers its own movie rental set-top box, the 2Wire MediaPoint.

In an effort to keep pace with rival Netflix, Blockbuster has announced a partnership to offer instant access to its video library through various home and portable devices.

The movie rental company has partnered with Sonic Solutions to offer more than 10,000 movies for rent and sale to a variety of PCs, cell phones, portable media players, Internet-connected televisions, and Blu-ray disc players. The collection of offerings will be a combination of titles from Blockbuster and CinemaNow, a movie downloading service that Sonic recently purchased.

"Blockbuster is a ubiquitous entertainment presence in the physical world. Through this alliance with Sonic, we plan to become a ubiquitous presence in the digital world as well," Jim Keyes, Blockbuster's CEO, said in a statement. "Our goal is to offer consumers the most digital content, the most accessibility, via the most devices, both in and out of home."

While Blockbuster already has an existing library of online titles, thanks to its earlier acquisition of MovieLink, the CinemaNow partnership could get Blockbuster content onto more third-party boxes, such as all of the LG Blu-ray players and home theater systems announced at last week's CES

The partnership is Blockbuster's latest attempt to match Netflix, which has expanded past its DVD-by-mail service to offer movie streaming on Microsoft's Xbox 360 video game console, Blu-ray players, and TiVo digital video recorders. In November, Blockbuster introduced the MediaPoint player, a set-top box that--like Netflix's Roku--offers on-demand content to a consumer's TV.

Blockbuster plans initially to sell videos or rent them on a pay-per-view basis, but the movie rental chain said it is considering offering a subscription plan for unlimited access to Blockbuster's digital library.

Netflix already provides a free Web-streaming service to customers who are signed up for a monthly subscription that costs at least $8.99.

Netflix reduced its guidance for fourth-quarter revenue and subscribers on Monday, noting that the economic climate may be taking its toll on its movie rental business.

Shares of Netflix plummeted 13 percent in intraday trading, to as low as $25.19 per share.

In sizing up the fourth quarter, which began this month, Netflix is forecasting weaker than anticipated results. The number of subscribers is expected to be in the 8.95 million to 9.25 million range at the end of the year, compared with the company's earlier forecast of 9.1 million to 9.7 million.

Revenue, as a result, is expected to come in at a lower range, between $353 million and $359 million, compared to its earlier forecast of $357 million to $367 million. Net income, however, is expected to remain unchanged from the company's previous forecast of $18 million to $23 million for the fourth quarter.

Meanwhile, Netflix is preparing to report the financial results of its third quarter on October 20.

For the quarter ended on September 30, the number of subscribers fell to 8.672 million, compared with the company's earlier projections of 8.675 million to 8.875 million subscribers.

"Net subscriber growth in July was in line with expectations, but August was unusually weak," Barry McCarthy, Netflix's chief financial officer, said in a statement. "In September, the business regained momentum, with results slightly below original expectations, likely due to the economic climate."

The company's third-quarter revenues, however, are expected to remain within the range of its previous guidance of $343 million to $348 million--excluding the one-time $6.5 million credit it issued to subscribers after a service interruption in August.

Netflix has traced the causes of a lengthy system outage this month that prevented the online movie rental service from shipping for several days to a hardware glitch.

The good news for the company is that it received lots of help from vendors to determine that the cause of the outage, which hobbled the company's ability to ship DVDs from August 11 to August 15, was a "key faulty hardware component." Steve Swasey, a Netflix spokesman, said the company's "strongest aspiration is to safeguard this from ever happening again."

The bad news for the company is that Netflix can't yet prevent these system outages. While a piece of hardware, about which Netflix declined to provide details, was the cause of the latest glitch, it was not responsible for the system crash back in March, Swasey confirmed.

In that earlier case, a malfunction knocked out the company's Web site, as well as its logistics and delivery systems, for 12 hours, the company then said. In both cases, Netflix was unable to ship movies "to a large number of Netflix customers."

Two major meltdowns in 2008 raises serious questions about the soundness of Netflix's system. Tony Wible, an analyst at Citigroup, estimated that Netflix lost $1.8 million to $3.6 million for each of the days it was down. The 15 percent credit Netflix is providing to affected customers will reduce the company's third-quarter revenue by $6 million, according to Michael Pachter, an analyst at Wedbush Morgan Securities.

As more and more competitors jump into Web video rental, annoying system blackouts could become more of a liability for Netflix.

In both outages, Swasey said many customers hardly noticed the delays. Many users who were expecting packages weren't put out very much by waiting a day or two extra for their films. Customers never lost money or personal information, and by most anecdotal accounts, the service remains extremely popular with users.

At the root of the problem is the fact that Netflix is quite different from most e-commerce companies. It relies on the Internet, the U.S. Postal Service, and a groundbreaking fulfillment operation that combines software, hardware, and plain old elbow grease to ship those little red packages.

Netflix has won accolades for using technology to wrest market share away from big brick-and-mortar video renters, such as Blockbuster. The company has amassed 8.4 million customers and ships more than 2 million movies per day.

But perhaps now is the time that Netflix would do well to invest in a major system upgrade. If Netflix customers continue to see delays, it could undermine the company's credibility. Does Netflix really want users to consider Blockbuster's in-store kiosks? I don't think so.