As part of the agreement, America Online's equity investment in the home video distributor's online unit will be used for, among other things, joint development of broadband content and delivery services, the companies said.
Under the three-year alliance, AOL members will have access to the vast collection of home videos and entertainment information available on Blockbuster.com from the Home Video area of AOL's Entertainment Channel.
The partnership between AOL and Blockbuster comes at a time when interactive television is gaining popularity among software, telecommunications, and Internet companies. Giants such as AT&T, Intel, Microsoft, and Motorola are vying to become one-stop shops for providing Internet services with a wide range of content, including entertainment.
In addition, the agreement will give AOL members access to the video company's entertainment products by allowing them to go to a cobranded AOL-Blockbuster.com Web site or to use AOL keyword "Blockbuster.com."
Blockbuster, which has 65 million members worldwide, will engage in a major offline promotion of AOL, distributing free AOL 5.0 CD-ROMs at approximately 4,000 Blockbuster locations in the United States.
The Blockbuster.com site will be relaunched and made available to AOL members at the end of November.