With Blockbuster-Samsung Deal, Streaming Wars Heat Up

Blockbuster On Demand

*Blockbuster* CEO Jim Keyes may have dismissed digital downloads as the movie-rental industry’s “shiny new toy,” but that hasn’t stopped the company from taking steps to bolster its own digital-distribution business. A new deal with Samsung will integrate Blockbuster’s OnDemand video rental service into new HDTVs, Blu-ray players and home-theater systems this fall (some 2009 models may be backwards-compatible).

This adds to the set-top box Blockbuster (NYSE: BBI) launched over the holidays, as well as its plans to offer mobile movie rentals with *Microsoft*. Kevin Lewis, Blockbuster’s SVP of digital entertainment, told the LAT the new Samsung deal was an indication that digital-movie distribution was “no longer a niche” or a “hobbyist thing.” Note to Blockbuster’s senior brass: Your rivals have already figured that out — which is why they have a huge head start.

Netflix (NSDQ: NFLX) and Amazon (NSDQ: AMZN) have already struck similar deals with electronics brands like Samsung, *LG* — and for Netflix, most recently, *Sony* — not to mention streaming partnerships with *TiVo*.

The synergies between the two companies helped fuel the (still unsubstantiated) rumors about Amazon possibly acquiring Netflix, which sent the latter company’s stock price soaring (though Kara makes the case that *Microsoft* would be a much better suitor).

Then there’s Best Buy, which recently brokered a deal with CinemaNow to launch its own digital-download service; the electronics retailer has also inked an aggressive cross-promotional deal with TiVo (NSDQ: TIVO) that includes development of a co-branded DVR (which could presumably include movie downloads as well).

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