One fundamental difference is that Sega Channel was mostly comprised of games that were years old and often out of print entirely. New games were only available

One fundamental difference is that Sega Channel was mostly comprised of games that were years old and often out of print entirely. New games were only available on the service as either time or content limited demos or as pay-per-view games for an extra fee. They didn't do the thing Microsoft does where all their games are available for free on Game Pass at launch. This meant that Sega Channel was mainly a way for publishers to get a little bit of extra money out of their back catalogs, it didn't compete for game sales with new titles like Game Pass does.