11/04/09

Best Buy is moving into digital video

Best Buy will offer web access to movies and other entertainment content, embedding technology from Sonic Solutions into some consumer electronics devices sold in Best Buy stores and on BestBuy.com.

Mark Brohan , Research Director

Best Buy Co. Inc. has taken another step in building its business of offering consumers access to movies and other entertainment content via the Internet.

The retail chain will embed the Roxio CinemaNow technology from Sonic Solutions into a selection of consumer electronics devices sold in Best Buy stores and on BestBuy.com. The list of devices, from a variety of manufacturers, includes web-connected television sets, portable media players, personal computers, Blu-ray Disc players, set-top boxes and mobile phones, Best Buy says.

Under terms of a multi-year agreement, Best Buy says it plans to license and deploy Sonic’s Roxio CinemaNow technology and services platform to make on-demand digital content delivery a standard feature on connected consumer electronics devices. Best Buy, No. 10 in the Internet Retailer Top 500 Guide, also acquired warrants enabling it to purchase shares of Sonic Solutions common stock. Neither company offered details on the stock option.

With the new service, consumers will have access to buy or rent movies, TV shows, independent films and older movies, which they will be able to access on many devices. Together with their entertainment studio partners, Best Buy and Sonic plan to also collaborate on new service and content offerings, including those that leverage digital copies to transition from physical disc sales.

“Our relationship with Sonic Solutions allows Best Buy to quickly establish a strong position in the digital delivery of video entertainment,” says Brian Dunn, CEO of Best Buy. “It also enables us to make deeper and more meaningful connections with our customers and expand our relationships with content owners and hardware vendors to create compelling new home entertainment solutions.”

The agreement could help cement the value of digital video entertainment among consumers, while also opening more doors for movie and television distribution companies, says Dave Habiger, president and CEO, Sonic Solutions. “With Best Buy’s focus, we expect on-demand entertainment to quickly grow into a mass market activity, with digital sell-through and rental becoming a significant new revenue stream for content owners,” he says.

Roxio CinemaNow includes Hollywood-approved digital rights management to prevent unauthorized copying, and secure device-optimized playback of digital entertainment. The Roxio network includes devices from manufacturers such as Dell Inc., LG Corp., Microsoft Corp., and TiVo Inc., and the company provides online movie delivery for Blockbuster Inc., No. 37 in the Top 500 Guide.

Last month, Best Buy and Netflix Inc., No. 18, signed an agreement allowing Best Buy to sell online and in stores exclusive, Insignia-branded Blu-ray disc players that enable Netflix members to stream movie and program picks over the web to their televisions.

John Thompson, general manager of BestBuy.com, will be the keynote speaker at the Internet Retailer Web Design & Usability Conference, Feb. 15-17 in Orlando, FL.

Topics:

Best Buy, Blu-ray Disc, High-definition television, Netflix, Sonic Solutions

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