While there may be demand for video-on-demand, the supply side looks a little thin these days.
With the major Hollywood studios casting a wary eye at Web-based distribution of their movies, deals are hard to come by. Just ask Blockbuster, whose video-on-demand trial with Enron Broadband Services landed like a dud last week after a struggle to find shows that could be offered. During the brief eight-month pact, Blockbuster didnt even manage to sign a deal with Paramount Pictures, which is one of its siblings in the Viacom corporate family.
The demise of what was billed as a 20-year exclusive agreement came as no surprise to longtime observers of the oft-promised and delayed entertainment service that entails downloading movies over the Internet via broadband. Sounding like a familiar echo of past proponents, Blockbuster representatives said video-on-demand has a future, just not a present.
For Enron Broadband, anxious to get content flowing over its 15,000-mile fiber-optic network, theres no time like the present. It said it will pursue its own deals while wishing Blockbuster well.
"The quantity and quality of movies Blockbuster had are not of a standard to roll out the service," said Enron Broadband spokeswoman Kelly Kimberley.
While much of the video-on-demand action is focused on consumers homes at the moment, there are also myriad schemes being hatched that will zero in on business users, with plans to make training films, sales presentations and the like available to far-flung corporate offices.
Behind the scenes, the major studios are developing their own distribution schemes, with giant Sony preparing to unleash its video-on-demand service, MovieFly.
In lining up its deals, Sony has had to tiptoe through some tricky antitrust issues. Negotiations have reportedly included Warner Bros., the movie branch of media colossus AOL Time Warner.
On the other side of the equation is the saga of Napster, in which the movie industrys musical counterparts saw their valuable content distributed freely over the Internet. While Napster has been legally reined in, the studios still fear seeing millions of bootleg copies of Gladiator streaming to a personal computer near you. Unlike the copy you make on your VCR, the digital versions downloaded on the Web may have higher visual quality and the potential for mass production from a single PC.
Meanwhile, Blockbuster must shift its business model from retail space to cyberspace as the new technology begins to encroach on the video rental business. Not only are Internet downloads coming, but the new personal video recorders that copy digital streams onto a hard drive could make videotapes and DVDs obsolete.
Already, Blockbuster has had to find a use for excess space in its stores as DVDs replace videotapes. A recently announced plan to host RadioShack kiosks in as many as 5,000 Blockbuster stores was based in part on the idea that video-on-demand customers might also shop for accompanying hardware. Blockbuster is already offering shelf space to DirecTV, the satellite broadcast subsidiary of Hughes Electronics now sought by media baron Rupert Murdoch.