UPDATE 2-Barnes & Noble to launch video service for Nook

Tue Sep 25, 2012 8:09pm IST

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By Phil Wahba

Sept 25 (Reuters) - Barnes & Noble Inc is launching a video streaming and download service this autumn for its Nook e-books and device business in the latest volley in its battle to keep up with Amazon.com Inc.

Barnes & Noble, the largest U.S. bookstore chain, said on Tuesday the Nook video service will allow shoppers to buy movies and television shows from Time Warner Inc's HBO; Viacom Inc ; Sony Pictures Home Entertainment ; and Walt Disney Studios. It will announce other studio partnerships soon, it said.

The company, whose Nook tablets and e-readers have found favor with shoppers, faces intense competition from Amazon, which already offers the Prime Instant Video service that offers videos for purchase, and makes the Kindle Fire tablet.

Amazon also has a subscription service linked to Prime, which offers free two-day shopping service within the United States and costs $79 a year.

Earlier this month, Amazon signed a three-year deal with Hollywood studio Epix that will add thousands of movies to Amazon's video streaming library.

Adding videos is necessary for the Nook devices to keep pace with Amazon's Kindle devices, which are used by customers to shop not only for books and entertainment but for a wide array of products on its website. That gives the online retailer an enormous advantage over Barnes & Noble.

"Unfortunately for Barnes & Noble, a bookstore, they're going to eventually have to sell everything in order to make their devices competitive," Forrester Research analyst James McQuivey said in an interview.

Barnes & Noble's Nook devices, which McQuivey said are better than Kindles in some instances, have allowed the bookseller to win as much as 30 percent of the U.S. e-books market, according to its own estimates.

The Nook Video service will launch in the United States this autumn, and in the United Kingdom, where Barnes & Noble will start selling Nook devices, also this autumn - in time for the holiday season.

Videos that are streamed and downloaded from Barnes & Noble's Nook store will be stored in the Nook Cloud. Video content can be watched on Nook devices as well as other devices once Barnes & Noble launches a free application.

Nook Video will also allow users to integrate their DVD and Blu-Ray discs and digital video collection across devices through media service UltraViolet.

Barnes & Noble shares were up 2.2 percent to $13.01 in morning trading.

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