Best Buy Nears Launch Of Revamped On-Demand Video Service
March 03 2010 - 2:00PM
Dow Jones News
Barely a week after Wal-Mart Stores Inc. (WMT) signaled its
latest push to sell and rent movies over the Internet, Best Buy Co.
(BBY) is preparing to roll out its own, revamped digital-download
service.
In an Internet posting, Best Buy said its best customers are
allowed one free movie rental download each month from Blue Sky
Video by Best Buy, which the retailer said is "coming out
soon."
A Best Buy spokeswoman confirmed the retailer will release more
information on the service in the coming weeks, adding that Reward
Zone Premier Silver members can access the downloads as part of new
benefits to the loyalty-rewards program until then via the current
link to CinemaNow.com off Best Buy's Internet site. She declined to
provide other details.
Best Buy in November announced it would develop an on-demand
movie and entertainment service as part of a multiyear partnership
with streaming service Sonic Solutions' (SNIC) Roxio CinemaNow. The
deal, which included Best Buy acquiring warrants to purchase shares
of Sonic Solutions' stock, also allowed Best Buy to embed the
service on various electronic devices.
Movie-rental chain Blockbuster Inc. (BBI) is another retailer
that uses Roxio CinemaNow's technology for its on-demand
digital-download service.
Also last year, Best Buy disclosed a partnership with
video-by-mail giant Netflix Inc. (NFLX) to offer streaming video
through Best Buy's Insignia DVD players. Netflix's Watch Instantly
service is accessible via Microsoft Corp.'s (MSFT) Xbox 360 and
Sony Corp.'s (SNE) Playstation 3 videogame consoles, too.
It was unclear Wednesday how Blue Sky Video by Best Buy will be
distributed and whether the service will be embedded on the same
devices that have Netflix or Blockbuster's on-demand access.
Wal-Mart last week confirmed it is buying the VUDU Inc. video
streaming service, which allows high-definition movies to be
digitally transmitted over the Internet to television sets and
Blu-ray disc players.
Sales of DVDs--which years ago generated a lot of customer trips
to stores--have entered a gradual downward slide as cheaper, more
flexible ways to get movies and other entertainment content are
developed. DVD sales by the movie industry are expected to drop
from $13.3 billion in 2008 to $3 billion by 2013, according to
market-research firm In-Stat.
Meanwhile, the use of video-on-demand services and content sales
via the Internet are increasing. In-Stat estimates those categories
should generate sales of $5.4 billion in 2013, up from $1.04
billion in 2008.
"We live in an on-demand world, so on-demand is happening," said
Norm Bogen, a digital entertainment analyst for In-Stat. "It's
happening quickly both from a technology perspective and
implementation."
In In-Stat's most recent quarterly survey of consumers, more
than 65% said they are extremely or somewhat interested in viewing
movies via the Internet on TV.
One major obstacle to faster growth is the ease with which
consumers can access a variety of content, rather than having to
tap different services for different types of content, such as
new-release movies or one studio's productions, Bogen said. That is
where retailers such as Wal-Mart and Best Buy might be able to
benefit as they offer a variety of download services on TVs,
Blu-ray players and gaming consoles they sell, he said.
"You need to make it easy to access all the content," he
said.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com
(Miguel Bustillo contributed to this article.)
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