Paramount Pictures plans to debut “Jackass 2.5,” the third installment of the “Jackass” movies, online, skipping the multiplexes entirely. “2.5” will launch Dec. 19 on Blockbuster’s new online property, Movielink, where it will be streamed free for two weeks. Then, beginning Dec. 26, it will be released on DVD, through video-on-demand and in Apple’s iTunes Store. An interesting experiment, and one that could pave the way for first-run broadband movies.

But will it succeed? Paramount certainly seems to think so. After all, the film is sort of a long-form version of the rough-edged, occasionally tasteless DIY content that predominates online. Said Tom Lesinski, president of Paramount Pictures Digital Entertainment, “When you think about what people generally consume online it’s fairly low-end user-generated content, yet there are hundreds of millions of people online watching video every day.”

Or as another executive candidly told the New York Times: “There’s more vomiting, nudity and defecation. The stuff that consumers really want.”

From top to bottom, Blockbuster is deliberately and willfully infringing on our patented methods. Netflix invented a 100 percent better mousetrap that Blockbuster copied.
- Netflix spokesperson Steve Swasey, April 5, 2006

Apparently, Blockbuster isn’t as hopelessly tethered to its VHS rental-business past as you might think. Yesterday, the video-rental retailer acquired studio-owned movie download service Movielink and with it a potentially significant foothold in the video-on-demand market. Terms of the deal were not disclosed, but early this year when rumors of an acquisition first began to circulate, analysts had estimated that Blockbuster might pay as much as $50 million.

Founded in 2002, Movielink is backed by Paramount Pictures, Sony Pictures, Metro-Goldwyn-Mayer, Universal Studios and Warner Bros. Studios. But while its impressive catalog makes it one of the Web’s largest digital-movie libraries, the service hasn’t caught on because of its strict digital-rights management software and prices (roughly the same as a typical DVD). Still, it’s likely a good acquisition for Blockbuster, whose market value has declined to just over $800 million from $8.4 billion, largely because of its failure to buy Netflix when it had the chance.

Blockbuster chair and CEO Jim Keyes called the deal the next “logical” step in the company’s transformation. Presumably, that means the next phase in Blockbuster’s re-creation of the Netflix business model, which the video-rental chain has been diligently following for the past few years. Netflix, of course, is spending some $40 million this year on its own VOD service, which is already up and running.

And what of Amazon Unbox? Xbox Live Video and Movielink? What of AppleTV and the iTunes juggernaut? Adapt or die, says Forrester. Only with ad-supported content will these ventures be able to compete with free TV-quality web streams. There simply aren’t enough media junkies to support the download model they’ve developed. “The people who pay to download video are extreme media-philes,” Forrester analyst James McQuivey told Variety. “They are not the tip of an iceberg. They may grow their own spending, but there aren’t many people like that left. In the video space, iTunes is just a temporary flash while consumers wait for better ways to get video. They’re already coming.”