It's a testament to the decline of the DVD and the rise of digital distribution that Best Buy, one of the kings of DVD retail, is now launching a digital content platform.
This morning Best Buy announced it's going to embed access to rent or buy digital content onto Blu-Ray players and even televisions. The retailer is partnering with Sonic Solutions CinemaNow platform to make it easy for consumers to pay to stream movies through the web-enabled device onto your flat screen. A surprising number of Best Buy devices connect to the web and will have this capability, from portable media players and computers, to TV sets to mobile phones.
So why encourage consumers to stream movies over a device that's intended to play high-margin high def discs? Best Buy seems to be hedging its bets that its massive DVD revenue stream won't be around forever. But Best Buy EVP Mike Vitelli told me we're already past that point: he says investing in digital content distribution isn't a hedge; it’s a reality, as consumer demand for digital content is here.
Best Buy and technology manufacturers like LG and Samsung have acknowledged that digital distribution is a key way to generate revenue to compensate for DVDs decline. Here Best Buy is looking to give consumers another reason to invest in a Blu-Ray player; it becomes a multi-use entertainment device. Plus, Best Buy will get a cut of the digital streaming revenue, without having to give up any shelf space.
Vitelli also made the point that Blu-Ray isn't portable or particularly affordable (it's more expensive than traditional DVD). Consumers increasingly need to access their content on the go - and without affordable portable Blu-ray players—but with more devices that play digital files—it's certainly in the company's best interest to sell those digital files as well.
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