Toys R Us has introduced a new digital content streaming service to support its new tabeo tablet and leverage its brand equity to deliver family entertainment to customers.

Toys R Us Movies is a family-oriented service that will deliver movies and TV shows for kids that will be able to be viewed on its own recently introduced tabeo tablet from as well as other tablets. The toy retailer is following in the footsteps of Walmart and Barnes & Noble as these merchants try to capitalize on the growing consumption of digital content, including on mobile.

“For a retailer, launching a streaming media business can be a sensible way to generate new revenue if the company has a strong brand presence, built-in foot traffic, and relationships with content owners – all of which Toys R Us has, to some degree,” said Paul Verna, a senior analyst at eMarketer, New York.

“The jury is out on whether this approach is sustainable for bricks-and-mortar retailers,” he said.

A competitive field
Other retailers have also come out with digital content streaming services in the past couple of years but it is not clear what benefit the strategy is bringing to these retailers.

For example, Walmart has the Vudu video streaming service while Barnes & Noble also offers streaming content to support its Nook tablets.

“Walmart’s VUDU service is used by only two percent of U.S. Internet users who subscribe to cable TV, and three percent of Internet users who aren’t cable subscribers, according to an Altman Vilandrie & Co. study,” Mr. Verna said. “That’s not enough to make a significant impact on the market or on Walmart’s bottom line.

“Barnes & Noble’s offering isn’t mature enough to evaluate yet, but that company faces a steep uphill battle against the likes of Amazon, Apple, and Google,” he said.

One of Toys R Us’ biggest challenges will be competition from established, deep-pocketed companies such as Walmart, Amazon, Apple, Netflix, Hulu, and Google.

Additionally, the retailer will need to successfully leverage its brand equity in the toy retail space into an entirely different business.

Another challenge will be having the raising the capital needed to acquire premium digital content.

Curated content
At launch, the Toys R Us Movies service features more than 4,000 titles, including new movie releases and TV shows, and users will be able to stream content on PCs, Macs and Adobe Flash-enabled devices.

The service will be expanded to additional Web-enabled devices including TV, smartphones and tablets going forward, with Toys R Us Movies planning to launch dedicated iOS and Android apps later this fall.

The service will also soon be available on tabeo, the toy retailer’s new Wi-Fi enabled tablet, which will be sold exclusively at Toys R Us stores later this month for $149.99.

In some cases, movies will be available on Toys R Us first. For example, Madagascar 3: Europe’s Most Wanted is currently available on Toys R Us Movies two weeks before the DVD will be available in stores.

Movies start at $2.99 for a 24-hour rental and at $5.99 to buy. Television shows start at $0.99.

The service also features customizable parental controls so that parents can choose the most appropriate content for their family’s viewing.

Toys R Us Movies is powered by Rovi Corp.

“Toys R Us’ opportunity could be that there’s lots of growth ahead in the streaming media business as the installed base of devices increases and consumer behavior evolves accordingly,” Mr. Verna said.

“Although other companies are steps ahead of Toys R Us, no one has really cracked the code of how to build a robust streaming business,” he said. “If Toys R Us can do this better than the competition, there’s no reason it couldn’t succeed.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York