Home opinion-and-analysis Seeking Nerdvana Video Ezy to acquire Blockbuster as rental stores prepare for video download onslaught

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Video rental stores are feeling the pressure from YouTube, Apple TV and PlayStation 3, with Video Ezy entering into an agreement to acquire the master franchise rights to Blockbuster in Australia.

The two video rental giants are circling the wagons, with attacks coming from all sides. Just this week Sony unveiled plans for a video download service for the PlayStation 3 to match Microsoft's offering for the Xbox 360, whilst television giant Viacom signed a content deal with YouTube rival Joost.

The Video Ezy deal would see the Blockbuster brand continuing in Australia. Blockbuster Australia comprises of 370 outlets nationwide - 29 owned by the company and 341 owned by franchisees. The company-owned stores would be acquired as part of the deal. Video Ezy has 518 Australian outlets, all of them owned by franchisees.

Both chains have been slow to respond to the internet threats, partially because they don't own most their stores. If the head office made movies available online, the company would be competing directly against the individual store owners. 

Video Ezy is working around this problem with a three month "electronic rental download service" trial in Sydney, with the aim of rolling out the service nationwide later this year. Customers will have to buy a "Home Media Centre" set top box from Video Ezy, which combines a digital television tuner, a 160GB hard drive recorder and a USB port. Then at a Video Ezy store they can copy up to 40 movies onto a portable USB storage device such as a memory stick, take them home and play them on their TV via the Home Media Centre. You've still have to visit the store to get your movies, which seems to defeat the purpose.

Thanks to the digital revolution there are more ways than ever to hire a movie on a Saturday night without leaving your house. Telstra's BigPond Movies lets Australians rent movies, television shows and music videos to watch on a computer, or on a television via an Xbox 360. To correspond with the consumer launch of Vista in January, Microsoft now allows you access BigPond Movies movies directly from the Media Centre Edition software built into some versions of Vista and XP.

ReelTime offers an Australian download-to-own movies service, with movies available the same day they hit the retail shelves. ReelTime movies will also play on your television via an Xbox 360.

Even Australia's television networks are slowly coming to the party. The Nine Network is following the lead of overseas broadcasters such as CBS and the BBC to offer "catch up" services that let you download shows you've missed during the last few weeks. The first episode of new US crime series Justice was even available for free. Ten did the same, recently offering the series two premiere of Supernatural as a free download five days before its first Australian airing. Seven has been slower off the mark, currently it's only offering previews rather than entire episodes. Yahoo!7 - a partnership between Yahoo! and the Seven Network - lets you download movies and television shows to rent or buy through an agreement with ReelTime.

Of course all of this could be blown out of the water when Apple unveils its Apple TV video download service this year. Originally dubbed the iTV, the Apple TV set top box will work with iTunes to make watching downloads on your television idiot proof. If the success of the iPod is anything to go by, Apple is likely to sweep away the competition.

All of this is bad news for the humble video rental store. They have been the amazing survival store of the digital revolution, but with Video Ezy and Blockbuster joining forces it seems one of the last bastions of old-school entertainment is feeling the heat.

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