Blockbuster Streaming Comes To TiVo, But Service Won’t Reach Many Consumers

Yesterday, TiVo and Blockbuster announced that consumers who have a Series 2 or Series 3 TiVo unit can now rent movies from Blockbuster. The service, which was originally announced in March, went live yesterday with movies costing between $2.99 and $3.99 a piece. While the release says that "subscribers can now rent hot new release movies", I couldn't find any movies to rent that I would call "hot new releases". The "new releases" section contained movies like "Shrink", "The Last Resort", "Dance Flick" and "Battle For Terra". As of this morning, there were 658 movies available to browse and Blockbuster said that "in the coming weeks," it will expand the number of movies available and provide a "select" number of HD titles.

Frankly, I don't understand Blockbuster's strategy with TiVo. While it makes perfect sense to bring their content to the device, why launch with a service that's only half baked? One of the biggest arguments made by Blockbuster on why they have an advantage over Netflix is that they have rights to first-run movies, something Netflix does not have. But then they launch the service with no first-run movies and don't even offer anything in HD quality.

While it's good to see Blockbuster working to get content on more devices, TiVo alone won't do much for the company since according to TiVo, as of last quarter, the company had 1.6 million standalone TiVo subscribers. While TiVo doesn’t break out how many Series 1, 2 or 3 units have been sold individually, if we assume that one million of these subscribers have a Series 2 or 3 unit, Blockbuster is realistically reaching a million or less consumers. And based on adoption numbers we have seen with Netflix's streaming on the Xbox 360, about 10% of Xbox 360 owners use the Netflix service. Keep in mind, Netflix streaming is free so the adoption numbers will be higher than those who have to pay to stream a movie with Blockbuster. That puts the number of consumers who are realistically going to use the Blockbuster service on TiVo probably at around 50,000 or less. That's not a big number.

Anything Blockbuster can do to bring content to more devices will help the company and this is the first step of many. But without having "hot new releases", HD quality and a large enough consumer base, Blockbuster is still going to have trouble getting their digital media strategy to pay off.