Best Buy has made good on its promise to offer a digital video service that will give its customers same-day access to new-release movies and TV shows. On Tuesday, the electronics retailer rolled out its CinemaNow service on some models of the Blu-ray Disc players and HDTVs it sells. The service is also available on most PCs.
For now, Best Buy is focusing on LG Electronics' brand of Blu-ray Disc players and home theater systems. But the company also plans to launch the content-download service on a range of devices from other manufacturers later this year.
A Digital Evolution
Chris Homeister, senior vice president of entertainment for Best Buy, pointed to the CinemaNow rollout as proof that the company is committed to evolving with its customers as the demand for digital content grows. But analysts aren't so sure most consumers are looking for an alternative to the already-popular services they are using.
Phil Leigh, a senior analyst at Inside Digital Media, thinks Best Buy will soon discover that the CinemaNow brand is weak in comparison to Amazon Video on Demand, Netflix and iTunes. Indeed, the brand is not as well known as the trio of market changers Leigh listed.
"The advantage CinemaNow has against Netflix is that there will be no subscription required," Leigh said. "But I am not sure that's a significant advantage, because with the subscription people are constantly reminded of the availability of the service."
Best Buy's Big Bet
Best Buy almost has to make a move, since it owns the legal rights to the trademark CinemaNow. CinemaNow in its current form is the offspring of a strategic partnership between Sonic Solutions and Best Buy. The service is powered by RoxioNow technology.
Best Buy plans to use the brand name to market digital movies and TV shows to consumers that want to buy or rent content without a subscription. By partnering with manufacturers like LG, Best Buy is working to make it easier for customers to access content on Internet-ready devices designed for the digital revolution.
At launch, the service will let users browse, search and purchase digital content.
Can Best Buy Compete?
Mike Dunn, Fox Home Entertainment worldwide president, has a different opinion than Leigh. As Dunn sees it, Best Buy is in a strong position to "expand on the market for on-demand home entertainment." Fox Home Entertainment is one of CinemaNow's content partners.
Leigh can see why Best Buy is heading in this direction -- and he said it makes sense. But he's not bullish on the electronics giant's chances against entrenched players in the digital-content realm.
"DVD sales are declining, so Best Buy is losing revenues there. This is an obvious way to address an area where revenues are slowing," Leigh said. "I still conclude that relative to iTunes and Amazon Video on Demand, CinemaNow is a weak competitor."