Enron Corp. and Blockbuster Inc. unexpectedly terminated an exclusive 20-year agreement under which the two companies were to jointly deliver video-on-demand to consumers' homes via Enron's fiber-optics network. Instead, executives at both companies said they would pursue video-on-demand services on their own or with other partners.

The much-heralded relationship between energy giant Enron and video-rental chain Blockbuster was struck just eight months ago, and was expected to be the jumping-off point for offering a variety of entertainment options -- including movies, games and music -- to home users. The agreement's termination appeared acrimonious, with each company blaming the other for problems and each claiming it was the one that walked away.

Enron said Blockbuster was slow to make deals with the Hollywood studios that would provide movies to be shown on the service. Indeed, Blockbuster had secured agreements with just two major studios, Vivendi Universal SA 's Universal Pictures and Metro-Goldwyn-Mayer Inc. That frustrated Enron, which said it wanted to roll out the service on an accelerated basis by the end of the year.

Confident of Its Ability

Blockbuster, a publicly traded subsidiary of Viacom Inc., has acknowledged that the process of making studio deals has gone slowly, but a spokeswoman said Friday that the Dallas company remains confident of its ability to secure the necessary film content for any video-on-demand service. The spokeswoman said "Blockbuster lost confidence in Enron as a partner," in part because of consumer complaints of glitches during a pilot program that is under way in four cities.

Blockbuster also is pointing to what it calls "technical and security reasons" that the spokeswoman said have drawn complaints from potential studio partners in the service. Universal Studios Home Video President Craig Kornblau confirmed that when Universal last week made its deal to provide films for the system, it demanded that a "hole in the encryption chain," identified during consumer tests, be fixed before Universal product is used.