Blockbuster & TiVo - Déjà Vu: I thought I did that 9 years ago!
I was chuckling when I read the Blockbuster news today and I feel obliged to tell yet another Blockbuster story (I have too many unfortunatley). The company today announced that they will team up with Tivo in a Video-Download service. Blockbuster will bring its movie-download service (that they inherited from the Movielink acquisition a couple of years ago) straight ot the television set on TiVo DVRs. This is pretty funny, because actually this is not the first time such a pact was announced. As I wrote before I used to be the President of BBI responsible for New Media and I was a signatory to a similar pact over 9 years ago.
I cooked up a deal with Morgan Gunther, President of Tivo right before the CES show in 2000. Both companies needed to boost their stock and this announcement was the best thing that happened for both in a long time. BBI stock hit $14 after the annoucement having lingered around $8 to $10 for months post IPO. TiVo hit $8 and then $11 a few months later, the highest it got for the next 5 years. I was the hero in the office for a few days.
Here is the an excert from the full press release at CES in 2000:
LAS VEGAS and DALLAS—(BUSINESS WIRE)—Jan. 7, 2000
TiVo, Inc., (NASDAQ:TIVO) the creator of personal television, and Blockbuster Inc. (NYSE:BBI), the world’s largest provider of rentable home entertainment, today announced an alliance to expand Blockbuster’s traditional video rental business to an entertainment service delivered through TiVo. The companies will work together to develop and deploy a video on demand like service that will enable TiVo subscribers to obtain a selection of movies for viewing through their TiVo receivers. The companies will work together toward deployment of the service in the coming year.
The TiVo/Blockbuster alliance also includes cross-promotional opportunities that will benefit each company’s customers. Using the TiVo Personal TV service, Blockbuster may, provide information on products, promotions and upcoming video releases available through its stores as well as running trailers for movies available through the TiVo system. Consumers will eventually have the opportunity to reserve movies for pick-up at Blockbuster stores or for viewing through their TiVo receivers.
TiVo will have the opportunity to promote special offers on TiVo receivers and TiVo Services to Blockbuster members, which currently includes a total of over 65 million active member accounts worldwide. Additionally, TiVo will receive promotional opportunities in the almost 4,000 corporate Blockbuster stores in the U.S., through signage, demonstration kiosks or other activities.
“TiVo has partnered with the leading companies in home entertainment, and this alliance, with the world’s leading retailer of home video, DVDs and video games See video game console. , is another step toward providing our customers with control over how, when and what they watch on TV.” said Morgan Guenther, TiVo’s vice president of business development.
“Our goal at Blockbuster is to provide quality movies conveniently to people at home whether it’s from our retail store base or through exciting new technologies like TiVo,” said Santo Politi, Blockbuster president, new media group. “We are looking forward to working with TiVo to deploy this video on demand service and to giving TiVo customers more choice and more control to watch what they want, when they want it.”
“TiVo is designed to provide multiple services to consumers,” continued Guenther. “The Blockbuster service is one of the premier entertainment services that will potentially provide content and commerce services to TiVo subscribers.”
About…
In our version of the deal, BBI would buy and own exclusively a portion of every TiVo DVR disk - that would essentially be our store in your house. Brodband penetration was not great at the time, so we were going to use the broadcast channel to download movies. The TiVo DVR would tune in to the local CBS channel early morning everyday, and record whatever was coming over the air for about 2H (2 to 3 movies per night). We would use special encryption technology TiVo had developped to secure the digital signal over the broadcast channel. We figured at any given time, we’d have 10 to 20 new release movies in the hard drive. Once the movies were in the DVR, the marginal cost of getting the consumer to purchase was low, so we’d progressively discount and get you to purchase (or subscribe to) most movies. TiVo would have done billing and there would be a rev share on the backend. We would migrate to internet downloads when it became feasable. BBI would also distribute TiVo DVR throughout their stores.
The TiVo deal was part of our grand strategy to reach the consumer directly digitally wherever they were. Of course, this is where the story yet again takes a bad turn into oblivion and gets lost in the anals of Blockbuster burocracy.
What do you think, if this were available in 2000 would you have used it? Anyone thinks it’s 9 years too late?
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