Blockbuster Does Broadband

Video rental chain Blockbuster Inc. (www.blockbuster.com) and a subsidiary of communications group Enron Corp. (www.enron.com) inked a 20-year agreement to deliver on-demand entertainment to consumers' PCs or TVs over high-speed telephone lines.

"We said a year ago that we would transition Blockbuster from a retail powerhouse to a multichannel powerhouse in the delivery of home entertainment," said John Antioco, chairman and CEO of Dallas-based Blockbuster, in a statement. "This is the deal that will make it happen."

Under the agreement, Blockbuster will provide content for the entertainment service and market the service to its customer base of 65 million households worldwide, Antioco said. Blockbuster also will sell DSL through its nationwide network of 7,200 stores.

Enron subsidiary Enron Broadband Services will encode and stream the entertainment over its global, broadband network infrastructure, provision bandwidth on-demand, store the content, and provide/monitor service quality.

The Enron Intelligent Network is designed to allow the scalability necessary to deliver secure, high-bandwidth content to a large population of simultaneous users, according to the company. And its delivery platform includes a distributed server architecture, software intelligence, and network monitoring and control.

"With Blockbuster's extensive customer base and content, and Enron's network delivery application, and the capabilities of the distribution providers, we have put together the 'killer app' for the entertainment industry," said Kenneth L. Lay, chairman and CEO of Enron Corp.

Initial distribution providers are SBC Communications Inc. (www.sbc.com), Verizon Communications (www.verizon.com), Qwest Communications International Inc. (www.qwest.com), Covad Communications Inc. (www.covad.com), TELUS (www.telus.com), and ReFlex Communications Inc. (www.reflexcomm.com).

These companies will offer a secure infrastructure for the on-demand service that will deliver entertainment through high-speed DSL.

Enron and Blockbuster, a publicly traded subsidiary of entertainment conglomerate Viacom Inc. (www.viacom.com), will name more distribution providers and delivery methods in the near future, spokesmen for the companies said.

The plan also calls for the two Texas companies to introduce the entertainment on-demand service in multiple U.S. cities by year-end, although executives haven't yet revealed which cities.

But in Canada, TELUS Advanced Communications, which provides e-business solutions, Internet access and multimedia services for the country's second largest telecommunications company, said that as part of this deal, it will conduct a trial service of streamed real-time video in early 2001 in British Columbia.

The service will deliver feature-length movies from Blockbuster to the TVs of 5,000 TELUS high-speed Internet customers, using TELUS's ADSL network and an DSL-enabled set top box.

"This agreement is an important step for TELUS in advancing our Internet and portal strategies," said Roy Osing, executive vice president and president of TELUS Advanced Communications. "Our plan is to continue to partner with leading content providers as well as to leverage our ADSL network infrastructure and portal strength to deliver both free and transaction-based content such as video, audio, animation, concerts, sports and other live events to Internet and ADSL customers."

If the trial is successful, TELUS will launch a broadband commercial video-on-demand service on its Internet portals that will be adapted for broadband customers.

"Streamed real-time video is an exciting example of the allure of broadband services," said Mark Schnarr, TELUS vice president of Internet services. "The convenience is what makes it so attractive - customers can watch what they want, when they want."

Beginning in 2001, Blockbuster plans to extend the service to other U.S. and international markets.

Generally, the Enron/Blockbuster deal lets consumers choose from an extensive library of movies through their computer or TV, as long as they have a set-top and a high-speed Internet connection.

The companies currently are working out details on what to charge customers and how Blockbuster, Enron and the DSL providers will share revenue, Antioco said. Consumers could be offered a pay-per-view option as well as a monthly charge that would include a certain number of movies.

Although the current deal with Enron is exclusive for delivery via DSL phone lines, the technology could be adapted to satellite or cable systems, as well, sources said.

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