Best Buy is positioning itself to concentrate on selling Internet-connected televisions, Blu-ray players, computers and phones as sales of CDs and DVDs continue to decline. The Minneapolis-based company made its first big digital move last year when it acquired online music service Napster in a bid to compete with Apple.

While iTunes continues to sell the vast majority of music online, and Napster is a distant fifth, behind Microsoft Corp.’s Zune service, Best Buy remains undeterred. Last week it announced a partnership with technology services provider CinemaNow to create a digital movie distribution service. By early 2010, the retailer plans to pre-load the as-yet-unnamed service on most of the Internet-connected televisions, Blu-ray disc players, computers and phones it sells. That will enable Best Buy to extend its reach into the home and sell entertainment directly to consumers without having to lure them into a store.

Best Buy executives are already envisioning what their chain of stores might look like in the future. Instead of rows and rows of DVDs and CDs, the center of the store will be a “hub” that emphasizes home connectivity by bringing together Napster and the new online movie service with devices needed to watch them. The store will probably still carry hot new releases, which drive foot traffic, but the amount of shelf space being devoted to DVDs, particularly older and less popular movies, is shrinking.

Source: LA Times