AOL Joins Forces with Blockbuster

The world's largest Internet service provider is teaming up with the world's largest video rental chain to deliver movies and as-yet-unspecified content over broadband connections. America Online is pumping $30 million into a three-year joint venture with Blockbuster Video, with the intent of leveraging the two companies' huge customer bases for mutual benefit. AOL members will have access to Blockbuster's enormous library of discs and tapes, and Blockbuster will promote AOL by giving away CD-ROMs of AOL version 5.0 at its more than 4000 outlets in the US.

The two companies will use AOL's equity investment to develop broadband content and delivery services, according to a joint press release. AOL members will be able to access Blockbuster videos and entertainment information from the Home Video area of AOL's Entertainment Channel—an exercise made easier by the use of the AOL keyword "Blockbuster.com."

Blockbuster's site is slated for a relaunch at the end of November. A unit of Viacom, Blockbuster has been the subject of much grumbling among investors due to its recent, less than stellar performance. There have been several rumors that Viacom might sell it off in a streamlining effort, but any such plans have been quashed for the moment by CEO Sumner Redstone. Viacom is in the midst of a mating dance with network broadcaster CBS. The Blockbuster-AOL linkup could conceivably tie together four giants of the entertainment and information industries.

Blockbuster has taken some bold steps lately in an attempt to shed its passive image. The joint venture with AOL comes on the heels of a Blockbuster announcement in late September that it would begin aggressively pushing DVD, and one in mid-October that it would take its sales and rentals online.

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