Blockbuster, Samsung in On-Demand Pact

SAN FRANCISCO -- Having been a step behind in the race to pipe entertainment from the Internet to television screens, struggling video rental-chain Blockbuster(BBI Quote) is counting on a new partnership with Samsung Electronics America to regain ground on rival Netflix(NFLX Quote).

In an alliance announced Tuesday, Samsung's next generation of high-definition TVs will include a built-in feature that will enable people to rent the latest DVD releases from Blockbuster with the press of a button on the remote control.

The Blockbuster rentals, expected to be priced from $1.99 to $3.99 apiece for 24-hour viewing opportunity, will be piped over high-speed Internet connections. Samsung's HDTVs will begin offering Blockbuster's on-demand service this fall.

The relationship is a coup for Dallas-based Blockbuster because Samsung is the world's largest manufacturer of flat-screen TVs. Blockbuster's on-demand rental service also will be accessible through software installed on Samsung's Blu-ray DVD players and home theater systems -- devices that already offer Netflix's own Internet streaming service.

With its stores losing favor among many tech-savvy consumers who want more instant gratification, Blockbuster has been diversifying its distribution options to reverse a long-running slump that has decimated its stock price and raised doubts about its future.

Besides stores and Internet streaming, Blockbuster also rents videos through the mail -- just like Netflix -- and in kiosks.

The multiple channels haven't impressed Wall Street yet. Blockbuster shares closed Monday at 58 cents, leaving it with a market value of just $112 million. Netflix's market value is approaching $2.5 billion, with some investors speculating the company could be acquired by Amazon.com (AMZN Quote), which also rents video over the Internet.