An internal memo may show that the relationship between Best Buy (s BBY) and TiVo (s TIVO) is growing stronger than ever before, and could signal the first signs of a broader digital strategy for the big box retailer. According to an internal memo leaked to blogger Dave Zatz, Best Buy will be the exclusive retailer selling TiVo’s next-generation DVR products. Not just that, but the big box retailer is committed to selling them, and is poised to invest $20 million in helping to market the new TiVo consumer electronics devices.
The partnership described in the memo follows on a marketing agreement that TiVo and Best Buy entered into last summer. But the tie-up could have deeper implications for Best Buy’s digital strategy, something which might be alluded to in the leaked memo. “As you know, when we sell TiVo, our customers get a superior entertainment experience, with easy access to the world’s largest on-demand library. Selling this offering also creates amazing incremental margin opportunities for our stores,” the memo says.
While the memo doesn’t name the on-demand offering, it could refer to a Best Buy-branded digital video service that could be rolled out on the new TiVo products. Such an agreement would expand on a number of moves Best Buy has made to get into the digital video business, including a partnership with Sonic Solutions to white-label its Roxio CinemaNow online video service. CinemaNow already powers the Disney and Blockbuster On-Demand video offerings on TiVo DVRs, so adding a Best Buy-branded service wouldn’t be an issue.
If so, the partnership would be the first implementation of such a service, which would add incremental digital video sales to its physical DVD and Blu-ray business. The bigger question might be what the news could mean for Amazon’s relationship with TiVo. Amazon’s video on demand service is currently available on TiVo DVRs; however, with a competing service from Best Buy possibly in the works and an exclusive relationship with the retailer, it’s possible that Amazon’s service might be dropped from the new products.
According to multiple reports, TiVo is expected to announce two new products at an event in New York tomorrow. That includes the TiVo Premiere and TiVo Premiere XL products, which are already listed in Best Buy’s intranet according to Engadget.
The Premiere version is expected to sell for $299 and offer up to 45 hours of HD video, with the XL being priced at $499 with a capacity of up to 150 hours of HD, as well as THX audio. Both devices promise “access to on-demand movies, TV shows, music videos, web videos and more.” Both devices are expected for sale starting March 27th.
Full text of the leaked memo is below:
“You Think You Know TiVo? You Haven’t Seen Anything Yet.
Inventing the DVR was just a warm up for TiVo. Some exciting things are now in the works over at TiVo, and Best Buy is along for the ride. TiVo is currently working on something major that will literally transform the way people watch TV, and Best Buy will be the only national retailer offering this unsurpassed entertainment experience. In fact, Best Buy and TiVo are taking their partnership to new levels in FY ’11, with Best Buy investing more than $20 million in marketing TiVo.
As you know, when we sell TiVo, our customers get a superior entertainment experience, with easy access to the world’s largest on-demand library. Selling this offering also creates amazing incremental margin opportunities for our stores. TiVo therefore represents a perfect example of a product that meets our goal of getting our customers connected and our goal of driving incremental margin, both which are a focus of this upcoming fiscal year.
On March 2, TiVo’s game-changing plans will be revealed, so stay tuned. You’ll want your sales associates to know all about this exciting news, so make sure they check out TiVo’s new eLearning on Learning Lounge, starting on March 3.”
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