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Thursday, April 10, 2008, 08:00 am PT (11:00 am ET)

Blockbuster said to be developing Apple TV rival

In the latest bid to revitalize its fading brand amongst a flood of new competitors, movie rental house Blockbuster is said to be developing a set-top device for streaming films directly to TV sets.

"The device is believed to be a stand-alone product akin to Apple TV as opposed to embedding a Blockbuster-branded service in such existing devices as Microsoft's Xbox 360 or TiVo," reports Reuters.

A spokesperson for the world's largest movie rental service declined to comment on the specific product, but acknowledged that the company was in discussions with numerous companies over products and services that would help it achieve its goal of providing ubiquitous access to its extensive movie rental catalog.

Once content with serving customers only through its brick-and-mortar retail chain, Blockbuster's emerging vision is to deliver content through any and every means possible. This includes its stores, its mail order rental arm, in-store kiosks, online downloads, and portable content-enabled devices.

"So it's not surprising that there are rumors out there," the spokesperson said.

More specifically, Reuters said it believes the product will leverage Movielink, an online service acquired by Blockbuster for $6.6 million last year that allows users to rent, download, and watch flicks on their computers.

It notes, however, that Blockbuster's push towards streaming video presents the risk that it will cannibalize sales at the company's retail chain, which has long been its bread and butter. The Dallas, Texas-based firm would also need a "significant investment in marketing and manufacturing" to stir awareness and compete in an already crowded set-top-box market, which has yet to be fully received by consumers.

In addition to Apple TV, Blockbuster will also be forced to contend with rival online movie rental service Netflix, which said in January that it was teaming with electronics maker LG to develop its own set-top box for streaming movies and other programming directly from the Internet to high-definition television sets.

Shares of Blockbuster are currently trading in the $3.20 range after falling some 17 percent to an all-time closing low of $2.69 after Apple announced in January that it too was launching a movie rental model through iTunes.