Blockbuster looks to TiVo for help

There have been rumors that Blockbuster (BBI) might have to file for Chapter 11. That speculation has been put to rest for now. The movie rental chain is in the midst of cutting costs by closing stores and renegotiating leases.

But the company's model of renting movies is outdated and it is hard to imagine how it can effectively compete in a digital age where movies are available over cable and broadband.

According to The New York Times, "The struggling video rental chain will announce a partnership with TiVo (TIVO) on Wednesday to deliver Blockbuster's digital movie library over the internet directly to the televisions of people with TiVo digital video recorders." Blockbuster will sell TiVo recorders in its store.

The program certainly makes sense, but TiVo already has deals with Amazon (AMZN) and NetFlix (NFLX) for relatively similar programs.

Blockbuster may still find a way out of its mess. Perhaps it will become a big player in streaming movies over the internet. Maybe its will boost its share of the mail-order business. But being the third service on the TiVo box is not going to be enough. Third place rarely is.

Douglas A. McIntyre is an editor at 24/7 Wall St.


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