Grocers’ digital dreams: Sainsbury’s launching VOD, Tesco ending MP3

The UK’s number-three supermarket is preparing to turn itself in to an online movie and TV rental service, as it vies with with leader Tesco on digital devices, just as they have in the aisles.

Sainsbury’s is contracting video tech firm Rovi to power video on demand and for download in a service due to launch later this year under its new Sainsbury’s Entertainment brand.

Rovi promised paidContent “a transactional-based model that supports the sale and rental of premium titles versus a subscription-based service”. The service will launch initially on web and Sainsbury’s says it wants to take it later to internet TVs, Blu-ray disc players, smartphones and game consoles.

Sainsbury’s movie and TV offering will go head-to-head with Blinkbox, which Tesco acquired a majority of last year. Expect to see each supermarket competing with Netflix, Amazon’s Lovefilm, BSkyB and other dedicated VOD brands on internet TVs next year.

Like Blinkbox, Sainsbury’s will eschew the subscription model, allowing it to offer PPV movies for sale or download on the same day as DVD release, rather than months later.

We would expect Sainsbury’s to explore following the way in which Tesco intends to grant online access at no further cost to customers who have bought equivalent discs in-store.

Supermarkets are now major retailers of books, movie and TV DVDs, and music. Now they are building up capability to maintain that position in digital consumption, mostly through acquiring vendor operators in each category…

After Tesco acquired a majority of plucky but unpopular online music streamer We7 earlier this year, it will now close its MP3 download store on September 1 after eight years, paidContent discovered.

The chain will not tell whether it is planning a new download store or will switch attention from MP3 to We7’s streaming personalised radio access, which it already links to from its website.

Although Sainsbury’s is fulfilling its movie and TV service by an outside contract, it has recently acquired aNobii and Global Media Vault to satisfy its MP3 and e-book retail initiatives in-house.

While Sainsbury’s and Tesco arm themselves in digital, the UK’s number-two supermarket, Walmart’s Asda, is notable for its lack of activity in the space.