Blockbuster Video and Enron are to set up rival video-on-demand (VoD) services, having ended their year-old partnership.

The original deal (Screendaily, July 20) had envisaged a match between Blockbuster's marketing power and the distribution capacity provided energy giant Enron's broadband fibre-optic network. This already spans North America and is being expanded in Europe.

But both sides now say that the other company had failed to address problems. Enron said that Blockbuster had failed to secure sufficient content, while Blockbuster pointed to consumer complaints "technological and security" reasons, taken to mean an encryption problem, as reasons for the divorce.

"The exclusive relationship has not yielded the quantity and quality of movies needed to drive demand for this exciting new on-demand service. We validated our ability to deliver content on-demand through the trial, and now Enron wants to take our service to the next level by adding content and subscribers on an accelerated basis,'' said Kenneth D Rice, Enron Broadband Services chairman and CEO. He now expects to sign deals with other film companies, games distributors and music publishers.

"We continue to believe VOD will eventually become a commercial reality and that Blockbuster will have a formidable presence in this arena. However, we also believe there will be multiple technologies that make this service available in the home,'' said John Antioco, Blockbuster Chairman and CEO.

Blockbuster now says it does not want to be tied to a single distribution channel and describes itself as "technology agnostic". It will hold on to the deals which it had signed with Universal Pictures and MGM. And it says that it is confident of being able to supply film content for any VoD service, although it has still not struck a deal with Viacom group sister company Paramount Pictures.

Blockbuster says it will now only sign long term video rental deals where it can secure rights that "go across multiple channels," after a dispute with Universal over a revenue sharing deal for VHS cassettes.

Major content suppliers appear to be picking sides while also keeping their options open as the technologists solve some of the problems that have so until now held back VoD.

Sony, which already has a pay-per-view deal with Starz Encore!, is expected in April to launch its own VoD service Moviefly, with content supplied by its own studios and, possibly, 20th Century Fox. Disney is understood to be aiming for more of a hardware solution, that would see it broadcasting over the net to a new set-top box. Universal last month also struck a supply deal with broadband webcaster Intertainer, which also has a deal with Artisan. Miramax is currently running a 12-film experiment with