File squarely under "too little too late": video rental chain Blockbuster today announced a partnership with TiVo to deliver its video on demand library to a subset of the latter company's set-top boxes. The Blockbuster OnDemand service is slated to roll out to TiVo DVRs in the second half of this year, with compatible TiVo units (Series 2, Series 3, HD and HD XL devices) also going on sale at Blockbuster's brick-and-mortal retail stores.

Although Blockbuster is still the number one video rental outlet in the US, it's seen share prices decline over 80% over the past year and has long struggled to find a foothold in the new digital media market. The problem with this announcement is that they're too late to the party — rival Netflix beat them to the punch both with the Watch Instantly feature to PCs way back in 2007 and with an aggressive partnership push with device makers last year. The other major problem is that TiVo itself is losing its customer base to a much larger array of DVR options now available, dipping to about 3.3 million subscribers currently — its lowest since 2005. Moreover, the subset of its customers with compatible TiVo models hooked into broadband is only about 800,000. Although those folks will see some added value to their existing TiVo service, we just don't see this deal galvanizing any movement to either pick up more TiVos or significantly increase Blockbuster rentals — certainly not on the order either company needs to turn their circumstances around.

Still, Blockbuster says this is an initial step in a larger strategy of partnering with manufacturers to get Blockbuster OnDemand service into more living rooms via more devices, as well as onto mobile phones. Unfortunately for them, most of those customers have a dizzying array of video on demand services to choose from already, including both Amazon's and Netflix's on demand offerings from those very same TiVo units. Pretty much all we can muster about this announcement is an E for effort.

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