Retailers brace for upsurge in downloads

‘Invasion of the Online Download’
Meanwhile, some online businesses already have tech-savvy customers. Netflix, the online service that ships DVDs through the mail, is rolling out a streaming-movie option. And of course there's Apple, which has begun selling movies at its iTunes store online. Video-on-demand from cable offers another option for avoiding a trip to the store. Amazon.com offers downloadable movies that can be sent to your TiVo, and Microsoft's XBox Live marketplace does, too, some of them in high definition. (MSNBC.com is a Microsoft-NBC Universal joint venture.)

"The advantages that a Wal-Mart or a Best Buy has in the traditional retail world really aren't there," said Prudential analyst Mark Rowen. For retailers, "their core strength is typically not technology and digital distribution."

Still, he praised Wal-Mart for trying.

"I think it's a sign that they understand that the business is going to be moving there in the next five years, and they want to be a player in it," Rowen said. Wal-Mart has its own music-download site, too, and Best Buy has partnered with Rhapsody on a music subscription site.

Best Buy thinks it can keep its DVD business going for a long time. It expects high-definition discs and traditional DVDs aimed at collectors will keep customers returning to stores.

Customers want flexibility, whether it's movies in high-definition, or on the PlayStation Portable, or downloads, said Best Buy Chief Executive and Vice Chairman Brad Anderson. "That's what the consumer is looking for. We want to do everything we can to facilitate the speed at which that becomes possible in the marketplace."

He said Best Buy is interested in downloads, but added, "We have to find a way that we're doing something that wouldn't be done otherwise. I don't think it's close."

Evan Wilson, who covers entertainment companies at Pacific Crest, said the movie and television industry believes that eventually all of their offerings will be available at the push of a button.

"One day," he said, "my kids will laugh at me for driving to a store and picking up a piece of plastic with content on it and putting it in a machine to play."

MORE FROM U.S. BUSINESS

U.S. business Section Front

Madoff's Mets jacket sells for $14,500 Ex-Madoff computer programmers arrested Ford: New police cruiser to replace Crown Vic No front-runner for next Bank of America CEO Report: Playboy in talks to be sold Intel to pay AMD $1.25 billion to settle lawsuits Medical marijuana business is growing ... up What a steal! Madoff’s homes get price cut Applied Materials to cut 1,300 to 1,500 jobs Hewlett-Packard to purchase 3Com Corp. U.S. business Section Front   Add U.S. business headlines to your news reader: