New York-Extending its brand beyond the video store, Blockbuster Inc. cut a 20-year exclusive agreement with energy-trading company Enron Corp. to deliver video-on-demand programming via high-speed digital subscriber lines.
The service-which is expected to begin in several cities by the end of the year and to roll out extensively by 2001-will initially provide movies on-demand and expand to other entertainment genres, such as games and Internet services, representatives from the companies said.
Enron will stream the content and store it on servers. Blockbuster will provide the content and serve as the "headend" for the service. SBC Communications Inc., Verizon Communications, Qwest Communications International Inc. and Covad Communications Group Inc. will deliver fare to the home via DSL lines.
Consumers would need converter boxes to receive the service, which would offer videotape quality and VCR functionality.
Sources said Blockbuster would charge about $5 per movie, although it was unclear if the titles would air in a home-video window or a later PPV window. Blockbuster may also need to negotiate VOD rights with studios.
Plus, running video over DSL lines faces some technical hurdles.
In Demand L.L.C. senior vice president of technology and operations John Vartanian said there were limits to how far from the headend DSL-video technology can reach. "There are some limitations that cable doesn't have," he added.
Nevertheless, Blockbuster executives believe the agreement will allow the service to deliver movies directly to the home.
Blockbuster has a nonexclusive distribution agreement with Metro-Goldwyn-Mayer Inc. to test streaming the studio's titles via the Internet. It also cut a deal with TiVo Inc. to provide Blockbuster-distributed programming and marketing options.