Blockbuster has announced that the company has entered into a deal with TiVo to provide OnDemand Video’s to consumer. The #1 movie rental business is changing gears as consumers flock to the Internet to get their movie fix, instead of going to a brick and mortar store. The company is also looking into expanding their offerings into consumer electronics by offering TiVo DVRs, mobile phones, Blu-ray players, and other devices.

In an article from USA Today it further states that:

The alliance comes at an important time for both companies. Blockbuster shares have fallen about 80% over the last 12 months, to 73 cents, as consumer interest in DVDs has flagged.

TiVo shares have dropped only about 22% to $6.98. But it’s struggling to keep customers from switching to lower-priced DVRs offered by cable and satellite companies.

TiVo has 3.3 million subscriptions, its lowest number since 2005. The company hopes to turn that around by persuading cable and satellite providers to offer TiVo’s user interface on non-TiVo DVRs.

Meanwhile, TiVo is trying to make its own DVRs stand out by adding Internet video, including movies from Blockbuster rivals Amazon and Netflix.

Virtually everyone in home entertainment is jockeying for position, with spending for online and mobile videos poised to soar to nearly $1.4 billion in 2012 from about $321 million last year, according to merchant bank Veronis Suhler Stevenson.

TiVo wants to offer “a complete television experience,” says Tara Maitra, vice president of content and ad sales. Blockbuster’s movie selection will be similar to Amazon’s but different from Netflix’s, which she says “has fewer new releases.”

Will this new alliance between Blockbuster and TiVo be enough? I doubt it. They are competing against cable and satellite companies who already offer DVR for basically free. Netflix with their new video ondeand service is in place and ready to rock and roll.

What do you think?

Comments welcome.