Blockbuster, TiVo ink video-on-demand deal

Set-top boxes to include reserving rentals, AOL TV

HOLLYWOOD — TiVo users may soon be enjoying some Blockbuster nights, as the leading homevid rental chain said it will soon bow a video-on-demand service through the personal TV outfit’s set-top boxes.

Additionally, TiVo said it has inked a licensing deal with Liberate Technologies to develop e-mail, chat, Web browsing and other interactive TV services for TiVo, which hopes to license the technology to other services. Both companies will also adapt TiVo’s digital video recorder technology to be integrated within AOL TV, expected to be deployed later this year.

The news, announced at the Intl. Consumer Electronics Show (CES) in Las Vegas, sent shares of TiVo up $11.94 to close Friday at $50.38, a gain of 31%.

TiVo already enables users to digitally record and store searchable TV shows or movies without a VHS tape, as well as pause, rewind and fast-forward live programming.

Through a system still being developed, Blockbuster will enable TiVo users to rent pics to view through their Philips- and Sony-built set-top boxes for a yet-to-be-determined fee or reserve titles for pickup from a Blockbuster Video store.

Pics offered will initially be limited to five to 10 older releases and catalog titles, customized for each subscriber based on their rental and purchase history at Blockbuster. Offers will be expanded as the technology for storing and delivering movies electronically becomes more widely available and less expensive.

Deployment of the service is expected before the end of the year — a big brand backing that is expected to give TiVo a serious edge over competitors ReplayTV and WebTV and push more of its set-top boxes into the marketplace.

Since its bow last year, TiVo has sold 5,000 boxes in the U.S. ReplayTV and WebTV do not offer video-on-demand.

Under terms of the deal, TiVo will be able to promote its special offers and services to Blockbuster’s 65 million members worldwide, as well as receive promotional opportunities in the almost 4,000 Blockbuster stores in the U.S. through signage and demonstration kiosks, for example.

The deal signals a new, more digital direction for Blockbuster, marking the first time it has made its inventory available for rent outside of its brick and mortar stores. Blockbuster only recently began selling new and used videos online through its Web site and AOL.

The capability to reserve titles has been in discussion for some time as an option Blockbuster might build into its Web site. That has yet to happen.

“Our goal at Blockbuster is to provide quality movies conveniently to people at home whether it’s from our retail store base or through exciting new technologies like TiVo,” said Santo Politi, Blockbuster prexy, new media group.

“TiVo has partnered with the leading companies in home entertainment, and this alliance, with the world’s leading retailer of homevideo, DVDs and videogames, is another step toward providing our customers with control over how, when and what they watch on TV,” said Morgan Guenther, TiVo’s veep of business development.

TiVo and Liberate meanwhile will develop a new product, which the companies hope to sell to network operators in North America in the second half of the year.

“By combining Liberate’s leading platform for interactive TV with TiVo’s Personal TV service, we are not only providing viewers with a better TV experience, we are providing the industry with a complete, open platform for enhanced TV,” said Mitchell Kertzman, prexy and CEO of Liberate.

Shares of Blockbuster were up $1.63, closing Friday at $11.63, up 16%; Liberate was down $1.25 to end the week at $190.63.

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