Best Buy Co., Inc (NYSE:BBY) and Sonic Solutions (NASDAQ:SNIC) today announced a strategic relationship that will result in a new Best Buy customer offering in its growing line-up of digital entertainment products. The new on-demand movie and entertainment service will be powered by Sonic’s Roxio CinemaNow[TM] and will allow consumers to have access to buy or rent a vast library of premium content.
To power this offering, Best Buy has entered into a multi-year agreement in which Best Buy plans to license and deploy Sonic’s Roxio CinemaNow[TM] technology and services platform to make on-demand digital content delivery a standard feature on connected consumer electronics devices sold throughout U.S. Best Buy retail stores and BestBuy.com. Under the terms of the agreement, Best Buy acquired warrants enabling it to purchase shares of Sonic Solutions common stock.
Best Buy, one of the largest consumer electronics retailers in the world, has a strong track record of bringing innovative technologies to a broad audience through its consumer-focused marketing, education, and Geek Squad services. To foster the consumer appetite for obtaining on-demand premium content electronically, Best Buy intends to embed the Roxio CinemaNow technology on a wide array of devices – web-connected television sets, portable media players, PCs, Blu-ray Disc players, set-top boxes, and mobile phones – from a variety of manufacturers. Best Buy expects to undertake a marketing program to educate consumers about the increased convenience, flexibility, and choice digital content delivery affords.
With the new Best Buy service, consumers will have access to buy or rent an extensive library of premium content including new movies, TV shows, independent films, and older catalog movies, which they will be able to access on devices in the broad ecosystem. It is anticipated that new titles will often be available on the same day they become available on DVDs in retail outlets. Together with their Studio partners, Best Buy and Sonic plan to also collaborate on new service and content offerings, including those that leverage digital copies to bridge physical disc sales and electronic sell through.
“Best Buy is in a great position to expand the market for on-demand home entertainment,” said Thomas Gewecke, president, Warner Bros. Digital Distribution. “The combination of Sonic’s platform with Best Buy’s expertise in selling consumer electronics, video content and technical services creates an opportunity for a wide variety of exciting new consumer offerings.”
“Our relationship with Sonic Solutions allows Best Buy to quickly establish a strong position in the digital delivery of video entertainment,” said Brian Dunn, CEO of Best Buy. “It also enables us to make deeper and more meaningful connections with our customers and expand our relationships with content owners and hardware vendors to create compelling new home entertainment solutions.”
“With Best Buy’s ability to drive in-store promotion and education, consumers will come to quickly understand and appreciate the convenience, flexibility, and control that digitally-delivered video entertainment affords them,” said Dave Habiger, president and CEO, Sonic Solutions. “With Best Buy’s focus, we expect on-demand entertainment to quickly grow into a mass market activity, with digital sell-through and rental becoming a significant new revenue stream for content owners.”
Roxio CinemaNow includes Hollywood-approved digital rights management, encoding and adaptive delivery technologies, and secure device-optimized playback of premium entertainment. Roxio CinemaNow’s cloud-based media services power devices which consumers can use to seamlessly enjoy video entertainment anytime and anywhere across the broadest range of devices. The Roxio CinemaNow ecosystem includes PCs, connected TVs, set top DVRs, Blu-ray Disc and mobile media players from leading manufacturers such as Archos, Dell, HP, LG, Microsoft, Nintendo, Pioneer and TiVo and is powering internet movie delivery for Blockbuster.
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