One Year Ago: MGM and Blockbuster To Offer Downloadable Movies

Under the nonexclusive agreement, the two companies will test and develop a model through which Blockbuster will charge a fee for MGM movies that are delivered into viewers homes through digital streaming or downloads. The companies will share all revenues generated by the venture.

E-Commerce Future

"We are excited to be at the forefront of technology with Blockbuster, as we forge new paths in the digital arena and significantly enhance the movie-watching experience in the home," said MGM Home Entertainment president David Bishop.

Bishop added: "In addition, revenue sharing has not only become beneficial to the industry, but it also has helped effectively satisfy the incredible appetite of consumers."

That consumer appetite has also prompted MGM to begin buying back broadcast rights to its own films, as well as those of long time rival United Artists. Last September, MGM regained the rights to more than 800 MGM and United Artists films from Time Warner-owned Turner Broadcasting System, Inc.

Rental Business

The deal with MGM seems to many to be an effort by Blockbuster to prevent being swept away by the rise of new technology. The Viacom-owned company is a giant in the video and game rental industry, with 6000 stores in the United States and 26 other countries, but stands to be hit hard if consumers turn away from the VHS format in favor of higher-quality and more convenient forms of entertainment.

"Access to video streaming rights for a portion of the world's largest 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," said Blockbuster CEO John Antioco.

Antioco also commented that "As for the revenue sharing agreement with MGM, which now encompasses a portion of the studio's renowned classic library, customers can be assured that more MGM films will be in stock at Blockbuster."