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Blockbuster Entering Realm of Web-Enabled TVs

6 Jan, 2009 By: Erik Gruenwedel

The ability to rent and buy movies, video games and TV shows from Blockbuster Inc. will be incorporated into a variety of Web-enabled televisions slated to be showcased at the 2009 International CES Jan. 8 to 11 in Las Vegas.

Speaking Jan. 6 to an investor group in Phoenix, Jim Keyes, chairman and CEO of Dallas-based Blockbuster, said access to Blockbuster.com had been incorporated into a widget developed and marketed by Intel.

“You can order movie rentals and purchases right from the TV screen,” Keyes said.

He said that in spite of the emergence of new digital opportunities to receive entertainment in the home, consumers in the near term would continue to buy and rent physical discs.

Keyes said the projected $2 billion on-demand market by 2012 would be dominated by cable VOD, and not third-party services from Amazon, Apple, CinemaNow and others. He said the slower-than-expected adoption of digital distribution has been due to the inability of most U.S. homes to receive a feature-length sized file on their available bandwidth.

“You need a minimum of 20MB per second, which is in a fraction of U.S. households, to make this a seamless viewing experience,” Keyes said. “That won’t happen for quite some time.”

He said he’d heard the DVD business characterized as a melting iceberg.

“I would define it as a melting glacier,” Keyes said. “This is your classic cash cow. Yes, the DVD is someday going to go the way of the VHS tape and 8-track, but it is going to take a long time for that evolution to occur.”

He said the chain is prepared to carry its 60 million annual customers into the digital age as it evolves. The CEO said Blockbuster brand is well positioned to be a partner or collaborator with burgeoning digital distribution models devised by telecommunication and cable operators.

Keyes said the chain was working with potential buyers to sell foreign store assets in Europe, the United Kingdom and South America while retaining the digital download rights in those areas.

He lauded Netflix for doing “a wonderful job penetrating” the by-mail segment, which he characterized as a $2 billion market, compared to the $22 billion in-store market.

“Even though [by mail] is a very fast growing segment, it is a very small segment,” Keyes said.

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