Under Best Buy's wing, CinemaNow will market itself as a provider of fresh goods. Like Blockbuster
As a Netflix investor, I welcome this CinemaNow buildout for several reasons:
- A wider range of devices that can play CinemaNow videos will also be fertile ground for Netflix to insert its own video platform. Would you rather buy a Blu-ray player that supports one digital video service, or a player that offers all of the important ones? Healthy competition will help the addressable market grow.
- The pay-per-rental model fills a different niche than Netflix subscriptions, and I think Best Buy is more likely to expand the total digital video market than to steal customers from Netflix. Investors in Blockbuster and Redbox operator Coinstar
(Nasdaq: CSTR)should be much more worried, because Best Buy is aiming at the heart of their market.
- The more, the merrier! If CinemaNow gains traction with consumers, the studios will have one more data point showing that video downloads work as a business. In the end, Netflix and everybody else will benefit from a more open licensing environment and wider market acceptance of the whole digital concept.
Best Buy digital video director Ryan Pirozzi says that it'll take some time for the new delivery model to take over, and predicts that Best Buy could start removing DVD racks from its stores in 2012. That's a couple of years faster than I had expected, dude. The future is digital any way you look at it, and now Best Buy has joined the fight to become the preferred rent-as-you-go provider.
But even as the market for piecemeal digital rentals gets ever more crowded, I'm still waiting for someone to challenge Netflix's subscription model.
Fool contributor Anders Bylund owns shares in Netflix, but he holds no other position in any of the companies discussed here. Best Buy is a Motley Fool Inside Value choice. Best Buy and Netflix are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended a bull call spread position on Best Buy. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.