Universal Studios agrees to make its new releases and archived films available to subscribers of Intertainer, a video-on-demand service.

By Laura Rich

We're inching closer to the day when we won't have to go to the video-rental store again.

Universal Studios announced on Wednesday that it will distribute new releases and extensive film archives through video-on-demand service Intertainer. Subscribers to the digital cable channel will be able to choose among 300 movies from eight major movie studios at any time. The addition of Universal gives Intertainer the broadest selection of major motion pictures among video-on-demand, or VOD, players. Other players include CinemaNow, SightSound and Blockbuster (BBI) , which is rolling out a service in partnership with Enron Broadband.

"Intertainer is a terrific partner for our ongoing VOD efforts because of its experience in the category," Holly Leff-Pressman, senior VP at Universal Television & Networks Group, said in a statement.

Intertainer's deal with Universal comes as Hollywood mulls the digital future for film. Most studios are digitizing their films and drawing up plans to deliver their libraries over the Internet to consumers and movie theaters. Sony's Web-based MovieFly system is gearing up for a spring launch, and Disney also is said to have a VOD system in the works. The rest of the studios are said to be in varying stages of talks with Sony or Disney.

Intertainer continues to make strides even though studios have a history of despising the middleman. Blockbuster has long locked horns with the studios, which have complained that the chain was reaping ancillary film revenues they should have controlled.

By aligning with Intertainer, the studios are supporting a new middleman by bolstering it with a larger selection of movies than their own services likely will have. Antitrust concerns prevent the studios from grouping all their content in a single jointly owned channel. But they also are better off distributing their films to as many outlets as possible. "It's never been the studios' way to just sell movies to their own channels," said Jonathan Taplin, president and CEO of Intertainer.

Intertainer is a relatively small competitor from an audience standpoint. The company was formed in 1997 and just launched its VOD service last spring. The service is currently available in Cincinnati and Willow Grove, Pa., and will be rolled out in seven more cities by the end of summer.

Intertainer is offered as a service to digital cable subscribers in those markets. Currently, there are fewer than 10,000 subscribers to Intertainer.

The deal was Universal's second VOD pact in as many days. On Tuesday, Universal agreed to add its movies to Blockbuster's VOD service.