BT (News - Alert) has become the first pay-TV provider in the U.K. to offer movies to buy as well as rent—for digital delivery and lockering. It’s a big milestone for the electronic sell-through (EST) segment.

Movies bought from BT can be streamed instantly to a customer’s YouView set-top box, where they can keep them indefinitely. BT said that it intends to expand the service to include other boxes over the coming months.

It’s interesting that BT is getting into the EST game, which has been long dominated by third-party sources, most notably Apple (News - Alert) iTunes. Gadgets like Google Chromecast and Apple TV offer a way to fling content on other devices, like phones, laptops and tablets, to the big screen. But moving EST to a pay-TV environment eliminates that middle-man requirement, and makes it much easier for consumers to buy and store digital media.

There’s thirst for digital movie purchases: According to IHS (News - Alert), the film and television industry's $18.3 billion home entertainment market consists of rental and sell-through segments, the latter of which includes the electronic sell-through of digital content. Modest growth in pay-TV video on demand, and strong increases in Internet sales, rentals and subscriptions, drove the second straight year of 30 percent-plus growth rates across digital home entertainment categories. On-demand rentals from rose by 40 percent and subscriptions expanded by 31 percent. However, Internet sales and EST increased by 39 percent.

 ABI Research expects EST to continue to grow, but other factors in the market—subscription and advertising-based services in particular—could impact its trajectory.

"The pace of change within the video market has been remarkable. The next wave of disruptive services will be national over-the-top services from existing pay-TV market participants, as indicated by Verizon's acquisition of Intel (News - Alert) Media and Sony's cloud-TV hopes,” said practice director Sam Rosen. “As more digital content becomes available, consumer's perceptions of ownership will change – instead of moving from physical media to electronic purchases (EST), video is looking increasingly like music, where consumers access owned and subscribed libraries of content via services rather than personally amassing collections."

In any event, BT is seeing where this goes. Customers will now be able to buy a swath of films from 20th Century Fox Home Entertainment and Sony Pictures Home Entertainment, in both HD and SD, along with a selection of what it calls “modern greats” and classics. Pricing starts at £8.99 for films in digital HD and £5.99 for SD.

At launch, some of the buyable titles include: The Wolverine, DreamWorks Animation’s Turbo and the Croods from Fox; Elysium, Oscar contender Captain Phillips and the Smurfs 2 from Sony Pictures Home Entertainment; and older titles like the Social Network, the Alien franchise, Black Swan and Jerry Maguire.

“BT TV’s new service complements Fox’s strategy of fostering easy, affordable and accessible ways for film fans to enjoy their favorite movies in digital HD,” said Robert Price, U.K. managing director at 20th Century Fox Home Entertainment, said:.”

Films are especially popular with BT customers, the telco said, with a film being rented through BT Box (News - Alert) Office every minute. The on-demand service offers more than 600 films, and has a partnership with Curzon Home Cinema where customers can watch many of the top titles on the same day as their cinema release.

The launch also adds fragmentation to the EST space, impacting the UltraViolet project—which still has an uncertain future.

The launch of the UltraViolet cloud-based digital locker system in 2010 was aimed at establishing a common digital distribution platform across the home entertainment ecosystem. Rather than relying only on DVD and Blu-ray sales, studios would offer an UltraViolet copy of a purchase, which could be pulled down via any UltraViolet-compatible device, including STBs from pay-TV providers. The idea is to make digital sales more ubiquitous, to encourage prices potentially coming down on digital sales, have more marketing devoted to digital sell-through, and for studios to add more value to the sell-through product by making HD available and building in smarter extra features.

"While we still believe UltraViolet can succeed in moving consumers to pure electronic libraries, from our conversations it is clear others are far more pessimistic," said ABI senior analyst Michael Inouye. "UltraViolet continues to experience some growing pains as the fragmented market prevents some of the key benefits UltraViolet touts; however, it still remains the most comprehensive solution to date. If UltraViolet fails to replace physical media this would undoubtedly impact the outlook for EST."