Best Buy’s Exit From Disc Sales Has Nothing To Do With The Market’s Viability

October 16, 2023

Thomas K. Arnold, Media Play News

Disc fans, don’t take it personal.

Best Buy’s decision to stop selling DVDs, Blu-ray Discs and 4K Ultra HD Blu-rays, both at its 1,000-plus physical stores in the United States and Canada and online, isn’t really a repudiation of a market it dominated in the late 1990s and early 2000s.

Rather, it’s part of a strategic shift away from its legacy consumer electronics and toward all things high-tech. As Best Buy says on its website, “our purpose is to enrich lives through technology.” On Best Buy’s latest earnings call, CEO Corie Barry told analysts the retailer wants to expand into “growing categories like PC gaming, and newer offerings such as GreenWorks cordless power tools, wellness products like the Ouraring, Epson, short-throw projectors, e-bikes and scooters, and Lovesac home furnishing products.”

Best Buy also is investing heavily in health tech.  In March, Barry on an earnings call said, “The role of technology within health care is becoming more important than ever and our strategy is to enable care at home for everyone.”

Studio sources tell me that Best Buy’s share of the disc business has shrunk to a meager 4%. Based on DEG estimates that consumers spent a little over $2 billion last year on disc purchases, that amounts to just $80 million – or less than $80,000 per store, much less when you factor in online sales.

Contrast that with Best Buy’s purchase two years ago of remote patient monitoring company Current Health for $400 million, which amounts to five years of disc-sale revenues.

Since then, the push into health tech has revved up. The company expanded its relationships between Current Health and other health systems to the point where its at-home health business now works “with five of the 10 biggest health systems in the United States,” according to the Best Buy Health website. 

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Last year, Best Buy began selling hearing aids as part of what it called in a news release “a new experience for hearing devices” that includes “an expanded collection of hearing devices, an in-store experience in more than 300 stores, and a new online hearing assessment tool.”

In March, Best Buy partnered with Atrium Health, one of the country’s largest hospital operators, to set up virtual hospital rooms in people’s homes. The retailer began training and deploying Geek Squad agents to provide and set up in-home, wearable technology that allows an Atrium Health care team to monitor a patient’s vital signs.

Just last month, in September, Best Buy announced plans to work with Pennsylvania-based Geisinger — one of the biggest integrated health systems in the country – on co-developing a bundle of technology and services that will enable healthcare organizations to operate their own chronic condition management programs.

Most recently, in early October, Best Buy announced it will start selling continuous glucose monitoring devices that require a prescription, a move Forbes says is “opening the door to broader future healthcare product offerings ordered by physicians for their patients.”

The push into health tech is so great a corporate priority that Best Buy has even launched its own Best Buy Health website, on which it says, “Best Buy Health meets you at the intersection of health and technology. Best Buy Health is here to help enable care and support personal connections using our world-class omnichannel capabilities, distribution and logistics, strong analytics, in-home services, and compassionate Caring Center call specialists.” Meanwhile, a Home Health Care article maintains that over the coming year, Best Buy “expects to grow its Best Buy Health sales faster than its base business as it leans more heavily into its at-home care platform.”

So disc fans, remember, it’s not about the DVD. Just as people change, businesses change, and Best Buy has charted a new path to a completely different destination.

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