December 28, 2010, 12:03 PM

Sears launches a digital video service

Sears enters the crowded ring of e-retailers that offer downloadable TV and films.

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Sears Holdings Corp. today launched Alphaline Entertainment, its previously announced service that allows consumers to rent or buy movies and TV shows online and then download them to watch on their TVs or personal computers. Alphaline Entertainment uses the RoxioNow platform, the same platform used since May by Best Buy Co. for its CinemaNow service.

"Collaborating with Sonic provides a great opportunity for Sears and Kmart to launch digital services for customers seeking even faster access to the latest in home entertainment experiences," says Karen Austin, president of consumer electronics for Sears and Kmart. Sears Holdings is No. 8 in Internet Retailer’s Top 500 Guide.

The Sears service enables consumers to download movies the same day they go on sale as DVDs and Blu-Ray discs, says Sonic Solutions, the owner of the RoxioNow platform. This gives the Sears service nearly a month’s lead on Netflix Inc., No. 14 in The Top 500 Guide and the market leader for digital entertainment streaming. Netflix must wait 28 days from a film’s release on DVD before it can make content available, according to its agreements with such movie studios as Universal Studios and Warner Bros. Studios set the time frame for when videos are available for rent or download, but so far have set different rules for a la carte rental services like Alphaline Evertainment and CinemaNow from subscription-based plans like Netflix, says Kurt Scherf, vice president and principal analyst at Parks Associates, a market research firm that covers digital technologies. Scherf says all the a la carte services play by the same rules, so it's unlikely that Alphaline will have a movie available before other single-rental services.

Consumers can rent or buy films and TV shows through Alphaline Entertainment. A 24-hour film rental costs $3.99. Consumers also can download and own the content for $19.95. Consumers can pay for purchases with credit cards and PayPal. Alphaline is the name of a Sears store brand of electronic cables that launched about a year ago, a Sears spokesman says.

Consumers can download Alphaline content to Windows-enabled computers, Xbox 360 gaming systems and Roxio-ready Blu-Ray players, TVs and set-top boxes, according to details listed on the site, which is directly available at http://alphaline.roxionow.com. Sonic Solutions says it is working with Sears to embed Roxio software in electronic devices such as high-definition TVs and Blu-Ray players  so that they come ready to support the service. Sonic is doing this with electronics sold at Best Buy, too. Sonic also plans to make downloads available to portable media players and mobile phones.

Sears says it expects to have Roxio-ready electronics available in stores and online beginning in late February. "As new 2011 product comes in from manufacturers it will be built into all their systems and we'll be able to demonstrate how Alphaline works on the sales floor," says Elliott Becker, vice president of consumer electronics at Sears. Becker says Sears will provide extensive training to sales associates in Sears' retail stores so they can show how the service works and how it is different from other movie and content services. He also says Sears is working with movie studios on promotions that will be exclusive to Sears' service. 

Those in-store demonstrations and special promotions may help Sears establish the service and stir up overall electronic sales at Sears, Scherf says. "I think that there’s longer-term benefit of matching the consumer electronics sold at retail with a specific service. We know that the availability of online video content is a driver for consumers in purchasing Internet-connectable products."

Consumers who enter www.alphalineentertainment.com visit a Sears.com page that provides introductory details about the service. Consumers then click through to the Roxio Now-powered site, which contains no visible Sears or Kmart branding, which Becker says was intentional."Alphaline is a brand that is exclusive to Sears and Kmart. We sell accessories under the Alphaline name and we felt it was a cleaner presentation," he says. All consumers that wish to buy or download content at Alphaline have to create an account. Existing Sears or Kmart account information will not work.

Promotions of the service are not currently visible on Sears or Kmart home pages, but Becker says Sears will promote the service more extensively on Sears.com in the coming weeks. He says there are no immediate plans to promote it on Kmart.com. Eventually, consumers shopping for DVDs on Sears.com will see product pages that give them the option to buy the physical disc or to download it through the service.

Except for different branding, the Alphaline Entertainment home page looks virtually identical to that of Best Buy’s CinemaNow service. Best Buy is No. 10 in Internet Retailer’s Top 500 Guide. Several other Top 500 retailers, including Amazon (No. 1), Wal-Mart (No. 6), Apple (No. 4) and Blockbuster (No. 34), offer rental or sale of movies, TV shows and other entertainment content. 

"The Alphaline service is defensive move by Sears to remain viable in the retail electronics business," says Keith Nissen, principal analyst covering consumer and digital media at In-Stat, a research firm. He says retailers are moving into digital services to drive electronics sales and not to compete directly with online-only players like Netflix and Amazon. "They want to use online services to support and complement their retail store business strategies. It will be very hard for all of these retailers to be successful. However, even if they break even, the added traffic to their stores may make the services worthwhile," he says.

 

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