Blockbuster (BBI) joins the on-demand movie rental/set-top box battle: Today it started offering a $99 box by 2Wire that hooks up to your TV and home Internet connection for Internet-based movie rentals.
Sounds like a decent, cheap Christmas present. And -- bonus -- it has a built-in retail distribution presence.
But there's a few big questions: What will Blockbuster's content library look like? And why would someone pick Blockbuster's box over an ever-increasing number of competitors?
In its press release, Blockbuster touts movies like "Forgetting Sarah Marshall," "Get Smart," "Sisterhood of the Traveling Pants 2," "The Strangers," and "The Love Guru." None of those titles are available on Netflix's (NFLX) streaming service, which is free with its DVD rental service and compatible with a growing selection of set-top boxes. They're all available on Apple's iTunes rental service for $4. So depending on what Blockbuster charges for newish releases, that could be a plus.
Nielsen says the average household that rents DVDs rents about 20 per year. So for $99, you're buying about a year's worth of rentals, and a set-top box that might be useful in the future, either for renting more movies from Blockbuster, or whatever other features 2Wire or Blockbuster add to it.
But it doesn't play DVDs, so it can't replace your DVD player. And while two USB ports and a SD slot could mean future expansion, it's not an immediate digital multitasker like other video streaming-capable devices. These include Apple's (AAPL) more expensive Apple TV, which can also stream music and photos off your computer; Netflix-compatible Blu-ray players from Samsung or LG; TiVo (TIVO) boxes; SlingCatchers from Sling Media, Microsoft (MSFT) Xbox 360s, cable boxes from Comcast (CMCSA), etc.
The good news: No one has won this game yet. While we think the cable companies have the best chance to end up in control of the on-demand movie market -- they already have content relationships with studios and set-top boxes in most living rooms -- the market is still wide open. Blockbuster could just as easily succeed as anyone.
The bad news: Even if this is a hit, it's not going to fix Blockbuster's rotting retail business.
See Also:
Why Video On Demand Is Still Cable's Game To Lose
Boxee Raises $4 Million To Take On Apple TV, Microsoft, Cable
Netflix CEO: Cable Cos Not 'Very Excited' About Netflix Streaming
Disclosure: Mathias Döpfner, CEO of Business Insider's parent company, Axel Springer, is a Netflix board member.
