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A Blockbuster video store is probably already a short drive from you, but the movie rental mogul is stepping even closer, experimenting with a video-on-demand service that streams movies by a broadband connection into your home.

The company has launched trial services in Portland, Oregon, and Seattle that let broadband users select and watch full-screen movies streamed to their televisions, not their PCs. Blockbuster provides the movies while Enron turns them into digital files and stores them on a server. Reflex Communications provides the high-speed service and specially designed TV set-top boxes for 150 participating broadband customers. The trial service charges $4.95 per movie, but final pricing for service and rentals is not determined.

Quality: Comparable to Digital

If that's what it costs, Jim Nichols says he'll buy it. His Seattle apartment complex offers Reflex broadband services, and he's among the testers of the new streaming service. He finds the quality "very acceptable," as well.

"The quality isn't high-definition TV or DVD, but it's comparable to cable television," Nichols says. "We've had cable, digital cable, and ReplayTV, and it's comparable to all of those; it's a notch below DVD and DirecTV."

He expects Reflex and Blockbuster will eventually charge $5 to $10 monthly for the service on top of rental fees. "This is a good alternative to the video store," he says. "Even when my fiancée worked for Blockbuster and we got free rentals, we didn't use them because of the hassle of going to the store, picking the movie, and taking them back."

Testing the Streaming Waters

Streaming video over high-speed connections isn't new. It's done on PCs every day with special servers and desktop software like RealPlayer, Apple's QuickTime Player, and Microsoft's Windows Media Player. But watching movies on a PC isn't ideal, and even on TVs the streaming quality over broadband doesn't yet reach DVD level. It still sometimes suffers from the bleeps and skips that come with sending video packets over the Net.

Blockbuster and its partners assert that streaming saves time and protects copyrights (since you can't save movies to disk), unlike downloads. Reflex and Enron are applying encryption during the trial to prevent customers from saving movies or otherwise copying them, Scott Boyer, vice president of marketing, of Reflex Communications. Of course, hackers will likely set their sights on breaking the security.

"The streams have worked well in lab tests that occurred over months of time," Boyer adds. "So far we haven't had any quality issues in the trial; we use a high bit rate of 1.8 mbps of throughput to stream the video."

Blockbuster isn't ruling out a download service, but for now, "the streaming service offers the control and convenience consumers want," says Steve Pantelick, chief operating officer of Blockbuster's new media division.

When you rent a movie you can stop, pause, rewind, or fast-forward it as much as you want for the 24-hour rental period, Pantelick says. The pay-per-view movies in the trial play only at specified times, and you can't manipulate those showings.

Broader Tasks for Broadband

The video-on-demand service uses any existing high-speed Internet connection. In the trial, Reflex Communications provides the service and the Motorola set-top box, which brings the full-screen movies to your TV rather than a small window on a PC. Price of the box isn't yet set, either.

Trial participants get the set-top box and a remote control to access and toggle through the library of movies.

"When you pick a movie, there's only a four-second latency to watch it," Boyer says. "It's basically just like renting a video, only you don't have to go to the store," he adds.

Blockbuster and its partners have not set a date for a commercial launch, which is likely to occur first in the test cities. But the trial video-on-demand service suggests new ways you might use your broadband connection for non-Web activities like watching movies.

The Ambitious Entertainer

For Blockbuster, it's yet another way to sell you entertainment. Its video rental empire is built around convenience, Pantelick says, noting a Blockbuster store is within three miles of 70 percent of the U.S. population.

The company already markets DirecTV satellite service in its stores and plans to put the Blockbuster brand on DirecTV pay-per-view later this year, Pantelick says.

Although its pay-per-view and video rental interests would seem to conflict with an on-demand streaming service, Blockbuster considers them complementary.

"The benefit of a virtual environment is the opportunity to provide movies that have been out for years but were not well marketed," Pantelick says. So you might find lesser-known movies on the video-on-demand channel. You might also find new releases through pay-per-view, rather than on the on-demand streaming service. Blockbuster expects to increase the new releases as it signs deals with studios.

Reflex's Boyers believes streaming video is the best way to rent movies, rather than some sort of limited-use download, or even selling a movie by download.

"People don't want to wait for a download," Boyers says. Customer Nichols says he might wait for a purchased download if it costs the same as a rental.

Either approach expands the use of broadband technology.

"Services like this show that broadband isn't just about flipping through Web pages faster," Boyer says. Movies on demand "could take broadband to more mainstream users."

Blockbuster's Pantelick expects set-top boxes to become multifunction in the next 18 to 24 months, going beyond even video recording, Web TV, and video-on-demand services. Blockbuster, of course, plans to be in the middle of this convergence.

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