Best Buy to Launch Digital Movie Service

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Best Buy Inc. may be joining the ranks of movie rental services like Netflix, iTunes, and Blockbuster very soon by offering digital movie downloads.

Best Buy is expected to announce that it will sign a deal with online video provider CinemaNow to offer a digital download service for movies. The service would be included along with any Internet-enabled electronics sold in the store, including TV’s, computers and phones.

Best Buy is the largest DVD retailer in the country, but DVD sales have been down by 13% in 2009 and the company has had flagging physical media sales overall in recent years. In a large-scale push to break into the digital marketplace, Best Buy purchased Napster last year for $121 million.

The new deal would be an expansion of the existing partnership Best Buy has with CinemaNow, in which digital downloads are available through the Best Buy website and in a limited number of electronic devices sold in stores. If the new deal comes through it would take effect later this year or early next year, and it would last three years.

CinemaNow would handle the back-end technology on the service, as it does in a similar partnership it has with Blockbuster Inc. CinemaNow also has agreements with a number of major movie studios.