No it's not
The prices are comparable if not more expensive than physical media and/or other digital delivery systems (iTunes, Amazon).
Furthermore, they are only compatible with their player which, from what I've heard, is a buggy piece of crap.
I became a copyright infringer - according to the letter of the law, which says I cannot make digital copies of my physical media - because I was tired of buying the same Pixar movie for the 4th time after the kids scratched it all to hell. Since this is a streaming only solution, this "alternative" cannot be used (reasonably) in cars or airplanes, which is the exact place I need it for the kids.
It's a better try than we've seen from them before, true... but not really an alternative yet.