Consumers may soon have to decide whether they want to rent or download the latest James Bond film.
MGM broadened its relationship with Blockbuster Inc. on Tuesday, making it the first major studio to allow its films to be downloaded from the Internet — and the first to make its entire library of pics available under a revenue-sharing agreement with the video rental giant.
Deal is the first content partnership to develop since Blockbuster said it is creating a video-on-demand service for digital video recorder TiVo’s set-top boxes (Daily Variety, Jan. 10). TiVo enables users to record and save programming without use of traditional videotape.
Under the nonexclusive agreement, MGM will help Blockbuster test and develop its business model that will eventually make MGM and other studio pics available to download or stream on the online service for a fee at the same time that they’re released on video or DVD in stores.
Potential is there
Through its pact with MGM, Blockbuster’s service on TiVo also would potentially enable users to download vids to their televisions. At the very least, users would be able to reserve titles at their local Blockbuster outlet.
MGM officials said selected pics will also be available to download through Blockbuster’s Web site for a fee — a service that would become more attractive as more high-speed Internet services are deployed into homes.
“This is focused on the Internet,” David Bishop, prexy of MGM Home Entertainment, told Daily Variety. “We haven’t spoken to TiVo or Blockbuster about TiVo. But certainly as we get deeper into that, TiVo is an option.”
Blockbuster plans to make the first downloadable pics available on either TiVo or the Web, before the end of the year. MGM’s first offerings would be trailers and a few select pics.
Financial terms of the MGM-Blockbuster deal were not disclosed, and a specific business plan is still in the early stages. Yet, with MGM on board, the deal signals that other studios soon could follow.
Race is on
With video-on-demand looming (Time Warner is also developing its own service), vid chains are racing to develop video-on-demand and other e-business ventures they hope will lessen their long-term dependence on vid rentals as their primary source of revenue.
Having hammered out the rev-share deals it wanted with the studios, Blockbuster would now get the business and the major studios the cut regardless whether consumers want to purchase, rent or download a movie.
Not only would such a deal help Blockbuster escape the trap of videocassette and disc dependence, it would protect the studios from the least-attractive aspects of prerecorded video: dubbing cassettes and discs out of pocket and figuring out what to do with them when demand dwindles.
“Access to video-streaming rights for a portion of the world’s largest modern film library underscores our goal as a company to provide quality, in-home entertainment in whatever form our consumers want it delivered, whether through our stores or other channels such as electronic delivery,” said John Antioco, Blockbuster’s CEO.
Revenues are split
Through a previous deal, MGM and Blockbuster already split revenues collected from the vidstore chain’s rental of new titles. The new pact extends it to older titles, as well, guaranteeing that more MGM titles will find shelf space in Blockbuster’s 6,900 stores worldwide.
“We are excited to be at the forefront of technology with Blockbuster as we forge new paths in the digital arena and significantly enhance the movie-watching experience in the home,” Bishop said.
Deal also may enhance Blockbuster’s value as Viacom prepares to sell the unit, which is already traded separately.