Best Buy is planting its flag in the growing market for online movies in a big way, banking that giving consumers access to on-demand downloads will help counter shrinking sales of DVDs.
The Richfield-based retailer said Tuesday it is teaming with Roxio CinemaNow to launch a movie download service that will let consumers pipe Hollywood hits into any device sold by Best Buy that connects to the Internet -- TV sets, portable media players, computers, Blu-ray DVD players and mobile phones.
The unnamed service is not expected to be available until early next year. Once available, consumers will be able to buy or view more than 20,000 of CinemaNow's movie and television titles.
Best Buy's entry into the digital download scene marks an "important evolution in the way we watch movies," said Russ Crupnick, vice president and senior industry analyst at NPD Entertainment.
"Movie collecting has stalled, and maybe peaked," he said. "Consumers now are saying, 'I just want to watch something whenever I want to watch it on whatever device I want to watch it on.'"
Sales of DVDs have been declining since 2006. Consumers are choosier where they spend money, while renting has become more convenient through RedBox vending machines at grocery stores and mail-in rentals through Blockbuster and Netflix.
Sales of DVDs fell 13.5 percent to $5.4 billion during the first half of 2009, according to the Digital Entertainment Group. Rentals rose by 8.3 percent to $3.4 billion.
Digital downloads and rentals are still a small slice of the market, but sales jumped 21 percent to $968 million in the first six months of the year. The bulk of that comes from on-demand movies from cable services, but a growing number of consumers are streaming video movies from the Web through Netflix, Amazon.com and Apple's iTunes.
Nancy Skilling is part of that. She owns a few DVDs but isn't interested in building a big collection. While she rents from Blockbuster, lately she and her husband have taken to renting on-demand movies through Comcast.
"We never have to leave the house," said Skilling, 58, of Oakdale.
For Best Buy, the nation's largest consumer electronics retailer, the partnership with CinemaNow is another step into the rapidly changing world of digital downloads for everything from music to television to movies. Best Buy bought digital music service Napster about a year ago, and last month announced a deal to stream Netflix's movie library through its Insignia Blu-Ray disc players.
CinemaNow, a service of California-based Sonic Solutions, has licensing deals with all the major movie studios. The Best Buy service is expected to offer access to new movies, classic oldies, independent films and television shows. Some titles will be available to download the same day the DVD goes on sale.
The movie technology will be embedded in Best Buy's private-label Insignia brand TVs and Blu-ray players. Best Buy spokesman Scott Morris said the company is in talks with manufacturers such as Samsung, Sony, Panasonic and Toshiba to add it to their devices.
Consumers will not have to pay a subscription, though the companies declined to disclose download prices. Sonic Solutions' president Dave Habiger said prices will be competitive with Netflix, RedBox and digital on-demand services offered by cable providers. Those prices vary from $1 per movie to monthly subscriptions for unlimited movies.
Analysts say moving digital movies from PC to TV is key. "We're a nation of couch potatoes," said NPD Entertainment's Crupnick. "We want to sit there and get things with that remote control."
Increasingly all of our electronic gadgetry will talk to each other and have many purposes.
Bob Doris, founder and chairman at Sonic, said consumers are getting ready for a "wholesale embrace" of digital delivery. He compared it to the transition from CDs to digital music downloads.
"All of these transitions have a pattern," he said. "Initially there's a lot of confusion and naysayers and doubters and you hear a lot of misinformation floating around. All of a sudden everybody starts running in the same direction and we're in rapid transition mode."
Jackie Crosby • 612-673-7335