RealTime IT News

AOL, Blockbuster Form Promotional Alliance

America Online Inc. and Blockbuster Inc. formed a three-year partnership Wednesday in which Blockbuster will become the No. 1 home video supplier on AOL's entertainment channel.

As part of the deal, AOL (AOL) will make a $30 million equity investment in the home video powerhouse, which will be used for the development of broadband content and delivery for both companies. AOL will also be promoted by Blockbuster (BBI) through key distribution centers.

In addition, the agreement will give AOL members access to the video company's premier entertainment products, by going to a co-branded AOL/Blockbuster.com Web site, or using AOL keyword: Blockbuster.com. Blockbuster.com will be relaunched and available to AOL members at the end of November.

Blockbuster will engage in major off-line promotion of AOL, including its AOL 5.0 software and will distribute free AOL 5.0 CD-ROMs at approximately 4,000 corporate Blockbuster locations in the U.S.

"This strategic alliance between AOL and Blockbuster creates a new force in the home entertainment industry," said John Antioco, chairman and chief executive officer of Blockbuster.

"The coupling of AOL's leadership in interactive services with our strength in home entertainment provides us both with immediate opportunities to offer new services to both our memberships and creates a foundation for the two companies to capitalize on emerging home entertainment technologies."

Bob Pittman, America Online (AOL) president and chief operating officer, said the company was thrilled to have developed the innovative alliance with Blockbuster.

"Blockbuster will make it easy and convenient for our members to find new and classic videos from its industry-leading roster of titles," Pittman said.

"With a powerful consumer brand name and extensive U.S. retail presence, Blockbuster also will effectively promote our AOL service and new AOL 5.0 software to their customers."