Can Target Stand Out In Crowded Online Video Market?

Can Target Stand Out In Crowded Online Video Market?

The retailer on Wednesday debuted its digital video platform, but it faces stiff competition.

Months after hints surfaced that Target Corporation was launching a video streaming service, the Minneapolis-based retailer said Wednesday that it is officially rolling out its new platform, called Target Ticket.

The service offers roughly 30,000 movie and television titles to buy, rent, download, or stream. Users of the platform pay a one-time fee to buy or rent programs, more closely resembling the model of iTunes than, say, Netflix, which requires a monthly subscription fee.

But can Target attract users in an increasingly competitive market that includes, in addition to iTunes, Netflix, Hulu, and Amazon, Wal-Mart’s Vudu and Best Buy’s CinemaNow?

“They definitely have to have a differentiator if they really want to drive a leading position in this space, but I think it’s too early to tell,” Robin Sherk, director of retail insights at the New York office of market research firm Kantar Retail, told Twin Cities Business in a phone interview. “I don’t see one yet, but that doesn’t mean one can’t come.”

Sherk said that the rollout of Target Ticket is “an indicator of the growing competition between retailers and technology companies,” and it also likely represents a strategic move by Target to maintain its position in the entertainment department, which comprises a substantial portion of the retailer’s sales.

“Hardlines”—which includes electronics, music, movies, books, computer software, sporting goods, and toys—accounted for 18 percent of Target’s total revenue last year.

While Target may need to make a clear case for why users of a competing service should make a switch to Target Ticket, Sherk pointed out that the company has two key attributes working to its advantage. Target has “a strong position in the sense that they have audience access through all their stores, so they have millions of people who can learn about this fairly quickly,” she said.

Too, Target’s reputation as being “trendy and hip” may benefit it, as customers tend to “trust their curation,” according to Sherk. It’s yet to be seen if the company can leverage that position in the digital entertainment space by, say, helping people easily identify movies to buy or rent that best suit their preferences. “That type of angle, I think, Target could play very well,” Sherk said.

Anne Stanchfield, divisional merchandise manager of entertainment at Target, said in a statement that Target Ticket was developed in part as a response to customers who complained that existing streaming options were overly complicated.

How Does It Work?

Users can currently access the service on Android and iOS mobile devices, PC and Mac computers, Roku devices, the Xbox console, and Samsung-brand televisions and Blu-Ray players. Target said it plans to expand availability to other devices “in the coming months.”

Target Ticket can be accessed here.

Target said that available programs on Target Ticket range from “new blockbuster films” (the company offered World War Z and Iron Man 3 as current examples), HBO programming, and 50 “popular next-day television shows,” such as The Walking Dead and Big Bang Theory. Prices vary; for example, World War Z cost $3.99 to rent or $14.99 to buy on Wednesday. An episode of the television show Justified could be purchased for $1.99, or an entire season could be procured for $22.99.

Users who opt to rent programs can watch them an unlimited amount of times within a 48-hour window. Holders of Target’s RedCard credit cards receive 5 percent off each purchase, and new guests can take advantage of 10 free downloads of select movies, the company said.

Target partnered with Common Sense Media, a San Francisco-based nonprofit organization that reviews movies and television shows, to give Target Ticket users access to thousands of reviews, in part to make it easier to identify child-friendly content. Users can rate the programs they watch while also filtering content based on age-appropriateness, level of violence, profanity, or rating (G, R, TV-14, etc.).

News surfaced earlier this month that Target was gearing up to debut its new streaming service. Documents distributed to Target employees indicated that a “public launch” would occur in “Fall 2013,” and marketing materials were slated to arrive in stores in early October.

On Wednesday, the Target Ticket website still listed the word “beta” next to its logo, but the company said the service is now “available to guests nationwide.”

A recent story in entertainment industry publication Variety, which was released prior to Target’s Wednesday announcement, suggested that the launch of Target Ticket may be complicated by the fact that entertainment technology firm Rovi recently completed the sale of its money-losing Rovi Entertainment Store, a video e-commerce platform that Target Ticket uses. A Target official, however, told Variety that the company is “confident” in the technology and doesn’t anticipate any problems arising from the sale.

Target Ticket represents the latest in a series of recent investments that Target has made in digital technologies. It recently acquired beauty products e-retailer DermStore Beauty Group, as well as the e-commerce sites and Target opened an office in San Francisco to focus on finding and fostering partnerships for technological innovation.

And a company executive recently said that Target is embracing the so-called “showrooming” phenomenon, suggesting that it represents an opportunity to more seamlessly integrate its physical store and digital operations.

Target is Minnesota’s second-largest public company based on revenue. The company is currently gearing up for the all-important holiday shopping season, although it plans to hire 20 percent fewer temporary holiday workers this year.