Blockbuster Downplays VOD Interest6 Jun, 2005 By: Erik Gruenwedel
Blockbuster Inc. today downplayed published reports it is considering testing an in-store movie download service in the United Kingdom.
The service would allow consumers to burn titles onto a memory card with infused digital rights management (DRM) allowing playback on portable media devices, including a laptop computer.
In the U.K., like the U.S., traditional brick-and-mortar video rental is under siege from nascent online services, reportedly including retailer Tesco, which already controls 10 percent of Internet music sales in England.
Blockbuster spokesperson Randy Hargrove said the company would not comment on rumors regarding intentions to offer an in-store video on demand service.
While Hargrove reiterated Blockbuster's continued focus on growing its core rental, retail movie and game store-based business, he confirmed the existence of a VOD strategy.
“Blockbuster continues to study and explore the VOD space and how the company can more effectively deliver movies to its customers, and we believe we are well positioned to be a force in the VOD arena by virtue of our brand, our customer relationships, our store network and marketing capabilities,” said Hargrove in a statement.
Technology analyst Phil Leigh with Inside Digital Media doubted DRM issues, including piracy, could be adequately addressed by the service regardless of claims to contrary.
“I think the technology today can make it so the content is fairly well locked down,” Leigh said. “But the studios would have concerns the files would be freely copied not so much by consumers but by store employees.”
Leigh said the appeal of a download service to Blockbuster would be the elimination of shelf space and elimination of a dearth of popular titles on release date.
Starbucks in select stores currently offers downloadable songs for a fee from a kiosk/computer from Hewlet-Packard.
“There is a retail precedent,” Leigh said.
Which doesn't mean much to Dennis McAlpine, retail analyst with McAlpine Associates, Scarsdale, N.Y., who doubted the studios would be very accommodating to an in-store download service.
He said Blockbuster's initial foray into movie downloads with an Internet-based download system created by Enron collapsed because the company couldn't get content from the studios and Enron didn't really have the system and customer base for a feasible business model.
McAlpine said Blockbuster tried years ago to replicate VHS movies as a business using a device that could duplicate a VHS movie in three minutes.
“I saw the machine actually working,” said McAlpine. “It was a fascinating machine. It would record at different points on the tape simultaneously and then combine them onto a new tape.”