MGM and Blockbuster Announce Agreement to Develop Digital Streaming

Pundits have long predicted that, as we move toward streaming more digital bandwidth into the home, consumers will begin to prefer video-on-demand services via their home network vs. renting films from video stores. This is not good news for the established bricks-and-mortar rental chains, many of which are fighting for ever-diminishing returns in crowded markets.

But in an interesting twist, last week, Metro-Goldwyn-Mayer and Blockbuster announced that they have entered into a non-exclusive agreement to test and develop a business model for Blockbuster to make available selected MGM films for digital streaming and downloading video via the Internet and other home-delivery technologies. The companies say that the arrangement between MGM and Blockbuster is part of a new multi-year VHS revenue-sharing agreement that encompasses both new films and library product.

David Bishop, president of MGM Home Entertainment, comments that "we are delighted to be able to partner with Blockbuster in new ways and further capitalize on the extraordinary collection of MGM films . . . as we forge new paths in the digital arena and significantly enhance the movie-watching experience in the home. In addition, revenue sharing has not only become beneficial to the industry, but it also has helped effectively satisfy the incredible appetite of consumers."

Blockbuster's John Antioco adds, "Access to video streaming rights for a portion of the world's largest modern film library underscores our goal as a company to provide quality, in-home entertainment in whatever form our consumers want it delivered, whether through our stores or other channels such as electronic delivery. This agreement brings us one step closer to accomplishing that goal."