Chicago (IL) - TiVo is under pressure to deliver more products to consumers to be able to justify its pricing structure for its subscription-based service. Now the company has landed a deal with Blockbuster, which could set it apart from the less-expensive DVR competitors and is yet another sign how movie content will be delivered to homes in the future.
The agreement between the two companies will allow owners of the TiVo Series2, Series3, TiVo HD, and TiVo HD XL DVRs to take advantage of OnDemand movie streaming, while TiVo DVRs will begin to appear on Blockbuster store shelves. Both companies seem to be able to benefit from the deal – Blockbuster by expanding its reach and following its rival Netflix and TiVo by adding a service that may make its relatively high subscription price more attractive.
Blockbuster shares have fallen almost 80% in the past year and are now hanging at 73 cents. The ability of streaming content and even piracy is hurting the DVD market in general, and consumer interest is faltering. Shares of TiVo have also dropped 22%. The drop is not as significant, but the company is struggling to prevent customers from dropping their service in favor of lower-priced DVR boxes.
TiVo subscribers are currently able to rent and purchase titles from both Amazon.com and Netflix, watch streaming videos via YouTube, listen to music utilizing the Rhapsody’s services, download movies from Disney, and even order a Domino’s pizza from the comfort of their their couch while watching television.
TiVo needs major deals for content offerings with the growing economic decline. There is increasing competition from cable and satellite service,s which have begun offering DVR service via all-in-one set-top boxes that do not cost money upfront and come without hefty subscription fees.
Even though TiVo offers a plethora of services, the increasing number of alternatives has caused serious competition for the company. DirecTV subscribers account for 2.8 million of TiVo’s entire subscription base of 3.3 million. In 2007, DirecTV started offering a second HD DVR, which gave TiVo even more competition.
The newest addition to TiVo offerings will enable subscribers with high-speed internet service (currently 750,000 of TiVO DVRs are connected to broadband) to buy or rent close to 10,000 Blockbuster On Demand titles for a price which is comparable to renting in stores. However, the service offered by Blockbuster is different: New releases will be offered via the OnDemand service prior to their pay-per-view release. The company plans to offer hot new flicks as soon as studios allow them to be sold digitally. Netflix does not offer such a service.
TiVo owners who already have Blockbuster accounts will pay up to $4 for movie rentals and $20 for purchases. When a customer rents a movie, they can view it for a full 25 hours. Purchased videos will have digital rights software enabled which will prevent the movie from being copied to a DVD.
The addition of the TiVo device is not Blockbuster’s only plan for gaining a better market presence. "You will see us in a large number of other devices going forward," Kevin Lewis, senior vice president of digital entertainment at Blockbuster told Reuters. The new agency reports that he added that “the company also plans to makes its system available to Apple Inc's products,” though there was no direct quote or elaboration from Lewis in regards to collaboration with Apple. "We need to be in the normal places that consumers want to watch movies," Lewis told Reuters.