Last November when Best Buy announced that it was going to go into the movie rental business, I didn’t think it was going to be a wise business decision. With Netflix being the undisputed online rental company at an incredible rate of $9 a month for one at a time rentals plus down streaming, how was anyone to compete against it? Also, RedBox has dominated the $1 rental movie business from its strategically located automatic rental locations. But Best Buy is going to introduce its own rental of movies starting at $2.99 to $3.99 per flick, and I once again challenge the wisdom of such a move.

A recent article states:

Best Buy is tying Web-delivered entertainment to electronic devices sold in its stores as demand for physical DVDs declines. The service will start with a la carte, on-demand purchases and may later become a subscription service like Netflix Inc., Chris Homeister, senior vice president of entertainment, said in an interview.

“This service, coupled with us selling an increasing number of connected devices, drives a broader consideration for Best Buy,” Homeister said in an interview.

Movie rentals will cost $2.99 to $3.99 as part of the service, Best Buy spokesman Scott Morris said. Videos will cost $9.99 to $19.99 for digital purchase.

What I don’t understand is that this business model already has been tried by others and has not succeeded. So why does Best Buy think it can do what others can’t? I personally believe it also will not be successful in its DVD rental business.

What about you? Can Best Buy make this fly or is it already late for the party?

Comments welcome.

Source – Bloomberg

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