Sears plans film-download store in challenge to Best Buy, Apple

Sears Holdings Corp., owner of the Sears and Kmart retail chains, will start an online store to compete with Apple Inc. and Best Buy Co. in selling downloads of movies and TV shows as Web-connected devices become more common.

The digital store will use an online service and technology operated by Sonic Solutions Inc., the companies said today in a statement. Sonic's RoxioNow system will be installed on televisions, computers, Blu-ray disc players, set-top boxes and mobile phones sold by the biggest U.S. department store chain.

With Sonic, the retailer will be able to offer a Sears- branded digital storefront and promote special programming and services across devices starting later this year. Best Buy already licenses Sonic software for the online movie store it operates, while Apple uses its own iTunes system.

"Teaming up with Sonic is a great opportunity for Sears and Kmart to quickly establish a position in digital video entertainment," Karen Austin, president of home electronics for Hoffman Estates-based Sears, said in the statement.

Sears joins a growing list of companies licensing Sonic technology, which lets users rent or buy films and TV shows for viewing on a number of products. Digital downloads are expected to eclipse packaged DVD and Blu-ray disc sales after 2015, said Bo Andersen, president of the Entertainment Merchants Association in Encino, California.

Sonic's technology will be included on TVs and electronic products made by Samsung Electronics Co., LG Electronics Inc., Vizio Inc., HTC Corp. and Toshiba Corp.

The electronics makers will begin shipping products that connect to Sonic's service later this year, in time for U.S. holiday shopping, Mark Ely, the company's executive vice president for strategy, said in an interview. It is already on some Blu-ray players, mobile devices and set-top boxes.

Apple's iTunes store, which sells digital downloads of music, movies, TV programs and games, has withstood threats from other retailers. Netflix Inc. offers a subscription service for mail-order DVD rentals and streaming of mostly older releases, using its own software. Wal-Mart Stores Inc. acquired movie download service Vudu Inc. in February.

Sonic has licensed thousands of movies from the major Hollywood studios, according to Ely. The Novato, California- based company also provides technology for Blockbuster Inc.'s online store and TiVo Inc.'s digital-video recorders.

"We're seeing more and more willingness among retailers and the content community to really make it all happen," Ely said. "Consumers aren't going to get behind digital media commerce unless that media is broadly accessible and playable on a number of devices."

Movies rentals will cost $2 to $5, Ely said. Films and TV shows will be priced at $2 to $20 for purchase.

Sears Chairman Edward Lampert has been trying to bolster profit and lure customers back to its stores in the U.S. and Canada. Sales declined almost 7 percent over the past year while revenue has increased for competitors such as Costco Wholesale Corp., Best Buy and Wal-Mart.

Sonic Solutions fell 26 cents, or 3.1 percent, to $8.20 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have fallen 30 percent this year. Sears lost $1.04, or 1.4 percent, cents to $73.61 and had retreated 12 percent this year.