Consumers have 30 days to watch a film once it is downloaded to the set-top box, and must finish watching it within 24 hours of pushing the "play" button.
The service, called Blockbuster OnDemand, can be ordered at www.blockbuster.com beginning on Tuesday.
"The MediaPoint digital player, featuring Blockbuster OnDemand, is entertainment made easy. We are bringing Blockbuster, and the thousands of movies in our digital library, straight to customers' televisions," said Jim Keyes, Blockbuster Chairman and CEO. "The player is simple to use, delivers DVD quality video, and there's no monthly subscription commitment. We are delighted to team with 2Wire to give consumers this great entertainment product."
The MediaPoint digital media player works with any broadband connection, either wirelessly via built-in Wi-Fi or wired via Ethernet cable. With full fast-forward, rewind, and pause capabilities, the viewing experience is DVD quality, no matter the speed of the broadband connection. Movies can be played right away or saved to watch later. Additionally, the player supports HD video content and can be connected to HDTVs.
Unlike Netflix's "Watch Instantly" feature, which streams movies to subscribers' TVs or personal computers, the Blockbuster on-demand service will be open to customers who do not subscribe to its DVD-by-mail service, Blockbuster Online.
The service is essentially a rebranding and expansion of Blockbuster's Movielink.com Web site, which offers about 10,000 on-demand movies for download to personal computers.
Blockbuster also is pursuing deals to package the new service with Blu-ray DVD players and is considering alliances with video game console makers.
Blockbuster has been competing with Netflix since it launched its online movie rental service in 2005. In May, Netflix launched the $99 Roku set-top box, and followed that with partnerships with companies like TiVo, Samsung LG and Microsoft to enable video from its "Watch Instantly" service be streamed to television.