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Best Buy making a second try at digital media

BestBuyNapster About three years ago, Best Buy embarked on a project to start offering movies via digital download, according to two people familiar with the company's plans. It ultimately abandoned the effort, however, apparently deciding the market was too nascent and risky to invest the necessary money in the service.

This year the electronics giant has decided that the time has come again. The company just announced a partnership with CinemaNow to create a service that will distribute movies and TV shows to televisions, Blu-ray players, phones, computers, and any other Internet-connected devices it sells. Last year, it made its move into digital music by acquiring Napster for $121 million, though it still remains  far behind Apple's iTunes in that market.

In the face of declining DVD sales, Best Buy is being more aggressive than competitors like Wal-Mart and Target in positioning itself for the digital future. But it's still very unclear whether brick-and-mortar retailers have an important role to play in a world of downloadable media. In the best-case scenario, Best Buy could be the trusted partner that explains how to make a networked digital home work seamlessly. In the worst-case scenario, it could go from leader in the physical world to also-ran in the virtual one.

The major studios, of course, would probably rather see Best Buy succeed so they can keep working with a retailer they know and trust.

For more on Best Buy's digital strategy, its prospects for success, and what it means for the future of the entertainment industry, read the story in today's Times.

--Ben Fritz

Photo: A Napster display at a Best Buy store in Culver City. Credit: Stefano Paltera / For the Times.

 
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