Experts doubt potential of video streaming initiatives

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Experts doubt potential of video streaming initiatives
Experts doubt potential of video streaming initiatives

Retailer Sears Holdings Corp. and 
restaurant chain Pizza Hut are rolling out video streaming services, stepping into the downloadable entertainment space that has become increasingly lucrative for Netflix and other companies. However, many brands will have a difficult time engaging consumers or creating a new revenue stream through downloadable entertainment, said industry experts. 


"As customers are moving from the physical to the digital for their entertainment, we want to make sure that we're aligned with our customers' needs," said Karen Austin, president of consumer electronics at Sears Holdings. "So we felt it was very important to deliver the capability on our various devices — television, Blu-ray, tablets and computers."


Austin added that the company's Sears and Kmart brands will also use its Alphaline Entertainment downloadable service "as a promotional device to drive traffic and reward customers." "So you could get these movies at 50% off or you could buy this TV and get a movie for free," she said. 


However, Dan Rayburn, principal analyst for the digital media group at Frost & Sullivan, said he doubts newcomers to video streaming will see the same success as Netflix, which attributed its Q4 2010 addition of 3.08 million subscribers to new streaming only options. Netflix VP of corporate communications Steve Swasey calls streaming "the way of the future."


Netflix introduced its online streaming service in January 2007, but has strengthened it numerous times in the past year through deals with major movie studios. The company launched a streaming-only subscription option in the fourth quarter of 2010.


"There's almost no money to be made in that for someone like [Sears Holdings], 
because they are not the content owner," said Rayburn. "The content owner obviously gets the largest percentage of revenue, so it makes no sense for them to be in that business."


He also disputed that Sears Holdings would be able to use Alphaline effectively as 
a promotional tool. "I don't know of any customer who walks into a store and says, 'Well, I'll buy this $800 TV over this one because this comes with one free movie,'" he said. 


Pizza Hut teamed with video on-demand service In Demand for its "Entertainment Hut" site. Launched in January, the service encourages consumers who order online to purchase one of about 17 films available each week. Consumers can also access three-to-five-minute previews while waiting for their pizza to be delivered. 


The service also includes movie trivia and a party-planning tool. Roger Berdusco, president of Triad Retail Media, Pizza Hut's digital agency, said the company is trying to add to consumers' food orders. "You've ordered the pizza to come to your home. How else can we surround that to add value?" he said.


Rayburn noted that Walmart took a different approach when it launched its own streaming video service last year. 


"They didn't just say, 'Hey, we're in the business. We're reselling a third party.' They went out and actually acquired their own platform and technology when they bought [on-demand movie provider] Vudu," he said. However, he added that for companies who partner with third-parties, "there's almost no money to be made."

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