Best Buy launches its own movie download store

Best Buy (BBY) wants to join the legion of other firms with branded movie download services, although it is not clear why. A number of media sources say that the program will be announced on November 3rd, and will start operating within a few weeks.

The electronics retailer is turning to Sonic Solutions' Roxio CinemaNow operation to provide the titles. CinemaNow is one of the original providers of online films and has 20,000 available titles, although the company was never successful. Software embedded in Best Buy's TVs and other consumer electronics products will enable the service to work.

Industry experts say that Best Buy hopes that the move into online movies will counter the chain's drop in DVD sales, which have been a significant source of income.

The question remains as to how Best Buy plans to compete in a field that is already dominated by Apple (AAPL), Amazon (AMZN), and NetFlix (NFLX). Perhaps the most significant competitor in internet movie downloads, however, is the digital set-top box that sits in almost every living room and delivers video on demand from the same cable companies and telecom firms that bring TV and broadband to tens of millions of homes.

Best Buy executives probably won't ever mention that one of the reasons that they are willing to risk starting their own download service is the low cost of entry -- particularly because they are using the existing CinamaNow platform. But that does not guarantee that the program will be a success.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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