At the end of last week, while most folks were preparing for the holidays, Sears Holdings (SHLD) quietly launched their new movie download service, originally announced in June, called Alphaline Entertainment. Powered by Sonic Solutions (SNIC) RoxioNow platform, the service is a nearly identical clone to BestBuy's (BBY) CinemaNow offering, but with pricing that's even more expensive.
To purchase many movies on the Sears platform, which has both a rental and purchase option, it costs $5 more than BestBuy's online platform. And since it's powered by Sonic Solutions, that also means that like BestBuy's offering, Sears platform won't work on the Mac and also doesn't work today using a Chrome browser.
If there is one thing we don't need in the market, it's another poorly priced movie download service offering absolutely nothing of value to what's already available today. It's like Movielink all over again. Does Sears really think their offering has any shot at competing in the market when BestBuy, who's been offering movies online for almost three years now, has almost no traction? The execs at Sears making these decisions must be living in a bubble.
As Engadget pointed out, many times you can get the Blu-ray version of these movies for cheaper than $20, yet Sears seems to think consumers will be wiling to pay that just for a digital copy. And as far as the branding of this new service goes, where was the marketing person when they came up with the name? Alphaline Entertainment? That's not a name consumers will remember, let alone be able to spell. It's as if Sears is trying to fail in the market right from the start. A local Redbox and Netflix (NFLX) make this service virtually useless. I'm sure someone will comment and say that with Redbox you'd have to wait 28 days for some movies and with Sears you can get it online faster, but so far, that 28 day wait has not stopped Netflix from growing.
I can't remember ever running into anyone who thought that the Sears or Kmart brand meant digital distribution or disruption. And this new service isn't going to change that. But to me, the real question is why does Sears even want to get into this business in the first place? There is not much money to be made re-labeling video services and it's not like BestBuy, Blockbuster (BBI) and Wal-Mart (WMT) are falling over themselves with cash from their online offerings. In fact, neither BestBuy, Walmart, Blockbuster, Sony (SNE), Microsoft (MSFT), or any of the other movie download services outside of Apple (AAPL) will even say how many movies or TV shows they have rented or sold.
I'm sure someone will say Sears does not care as it costs them almost nothing to operate the service, since they don't have to license content and they simply split any revenue they receive. But then why bother with such a service when you know it's not going to disrupt the market in any way, or even generate much in the way of revenue? I think the fact Sears has entered the online movie distribution business shows just how much hype exists around this segment of the market. It's as if all big box stores now feel like they need to get into the business just to make it appear as if they are hip, or so they can tell their shareholders they have a strategy for digital. As least Wal-Mart actually went out and spent money to acquire their own platform when they bought VUDU last year, offering a service that has some differentiator.
Sears online model and pricing is the same one that Blockbuster uses unsuccessfully to try and compete in the market. Yet there is no differentiator with this Sears offer, and absolutely no reason for any consumers to switch to it.
Disclosure: No positions