Wal-Mart to Launch Digital Movie Store

[BJ_M]

LOS ANGELES (AP) - Wal-Mart Stores Inc. (WMT) is launching its long-awaited online movie download store, entering a market that has yet to catch on with consumers but is expected to grow rapidly.

A "beta" version of the online video store, set to debut Tuesday, will sell digital versions of about 3,000 films and television episodes from all the major studios and some TV networks, including Fox Broadcasting. Wal-Mart will not initially offer content from ABC, CBS or NBC, although the company said it hopes to add shows from those networks.

The nation's largest retailer is using its buying power to beat the prices charged by other download services in many cases, offering films from $12.88 to $19.88 and individual TV episodes for $1.96 - 4 cents less than Apple Inc. (AAPL)'s iTunes store.

Apple charges less for some films sold on iTunes - $12.99 when pre-ordered and during the first week of sale, or $14.99 afterward. But it only carries films from two studios, The Walt Disney Co. and Viacom Inc. (VIAB)'s Paramount Studios.

Most studios have resisted signing deals with iTunes in part because of Apple's desire to sell movies at one price. Studios prefer variable pricing such as Wal-Mart is offering.

Apple's pricing has also caused scuffles between studios and major retailers, including Wal-Mart and Target Corp. (TGT) The retailers don't want studios to sell digital copies of films cheaper than the wholesale price of physical DVDs.

Wal-Mart's online store will sell older titles starting at $7.50, compared with the $9.99 charged by iTunes.

Wal-Mart also used its significant clout to launch its online store with films from all major studios. The Bentonville, Ark., retailer accounts for about 40 percent of DVD sales, and studios have been careful not to anger their largest customer.

Given Wal-Mart's importance, the studios readily agreed to sell films on the retailer's new site, analysts said.

The biggest impact of Wal-Mart's entry into the digital download business may be that it now frees studios to cut deals with other online services.

"It gets the ball rolling finally," said Tom Adams of Adams Media Research. "Now the studios are free to pursue it as aggressively as they can without worries about what Wal-Mart is going to think."

Amazon Inc. launched its "Unbox" video rental and download store last year without films from Disney.

Other online download and rental sites include Movielink, which is owned by five studios, and CinemaNow.

Unlike some offerings, Wal-Mart will not rent films online. The films can be played on a PC or transferred to Microsoft Windows Media-compatible portable digital players. The movies will not play on Apple computers or the popular iPod.

Movies bought from the Wal-Mart store also can't be burned onto a DVD, although the company said it hopes to offer the option by the end of the year.

Wal-Mart says it doesn't expect digital sales to cannibalize its retail DVD business for many years.

"Customers have a growing interest in downloading video content, but complementary and supplemental to buying content on DVD," Kevin Swint, Wal-Mart's divisional manager for digital media, told The Associated Press.

"With the health of the DVD business and coming high-definition formats, that business will remain quite strong for quite a long time."

Internet downloading is expected to generate about $4 billion in annual revenue in five years, compared with an estimated $27 billion from DVD rentals and sales, according to Adams Media Research.

Whether Wal-Mart can translate its success on the ground to the digital domain remains to be seen.

Wal-Mart abandoned its efforts to build an online DVD rental service in 2005 to compete with the well-established Netflix Inc. (NFLX)

The retailer also faces the same challenge that confounds other online video sellers - the fact that films cannot be easily transferred from a computer to a larger TV screen.

"The real problem is people want to watch these movies on their television set," said principal analyst Josh Bernoff of Cambridge, Mass.-based Forrester Research. "There already is an effective way to do that, which is to buy a DVD."

---

[Dv8ted2]

The problem is that the prices are still not realistic. Until these get near the price of a blockbuster rental, I would not touch it with a million foot pole.

[oldandinthe way]

The problem is that most people do not watch video on their PC, they like televisions especially those big screen ones.

Walmart is downloading content with Windows Media DRM10. Unless you hook your PC up to the TV - its watch it on your monitor or use a Media Player (tiny screen). If you do watch on your TV expect image to be inferior to DVD.

The problem with the online delivery concept is most people would prefer to download to PC and write a DVD. That is not provided. DVD quality is too long a download and studio piracy paranoia blocks it even for folks with plenty of time and bandwidth.

Walmart also warns you should back up the movie, but only allows yout to do that in a form which plays on the same PC it downloaded to.

The stock market says every company must be a player in the video download business, but no one will succeed using the technology approaches being implemented today.

[EAO]

The problem is that most people do not watch video on their PC, they like televisions especially those big screen ones.

Walmart is downloading content with Windows Media DRM10. Unless you hook your PC up to the TV - its watch it on your monitor or use a Media Player (tiny screen). If you do watch on your TV expect image to be inferior to DVD.

The problem with the online delivery concept is most people would prefer to download to PC and write a DVD. That is not provided. DVD quality is too long a download and studio piracy paranoia blocks it even for folks with plenty of time and bandwidth.

Walmart also warns you should back up the movie, but only allows yout to do that in a form which plays on the same PC it downloaded to.

The stock market says every company must be a player in the video download business, but no one will succeed using the technology approaches being implemented today.

Dead on.

This will fail in it's current business model - and dumb ass corporate will still wonder why.

[MOVIEGEEK]

Speaking of Apple:Steve Jobs is suggesting that the record companies do away with DRM to increase sales:
http://www.forbes.com/2007/02/06/jobs-apple-drm-tech-media-cx_lh_0206apple.html?partner=yahootix

I'm not a fan of Jobs but I have to agree with him on DRM:let us change formats so we can watch/listen however we like.

[Specialist]

The problem is that most people do not watch video on their PC, they like televisions especially those big screen ones... The problem with the online delivery concept is most people would prefer to download to PC and write a DVD. That is not provided.

Apparently, the news release indicates that Wal-Mart will eventually offer downloads for DVD burning.

But CinemaNow has long been offering downloads that can be burned to DVD: http://www.cinemanow.com

It's going to succeed, in my view, in the same way and for the same reasons that iTunes has succeeded.

Jerry Jones
http://www.jonesgroup.net

[oldandinthe way]

itunes has succeeded in spite of the sound quality. CD is superior but the portability of MP3 players and cost advantages over buying an entire CD win, and there is enough bandwidth to make the downloads close to painless.

Video lacks the cost advantage, suffers from bandwidth limit and the poor quality of faster downloads runs counter to the trend to bigger and higher resolutions TVs. And of course the studios have learned from the MP3 experience that if they allow movies to go the way of music, the'll continue to be making excuses for their lackluster sales - hence the heavy emphasis on DRM.

CinemaNow is largely irrelevant due to long download times. Amazon is selling burnable downloads of public domain video available at archive.org for free. They aren't touting their success either.

Downloaded video is pretty well stuck at the crappy quality level youtube provides. And youtube is a success because it isn't video for the sake of video.

[ntscuser]

Considering how long it took me to find a setup which could burn a DVD with a reasonable certainty of playback on someone else's machine and having witnessed the hopelessly botched attempts of friends to do the same, I would say the whole idea of download-to-burn is doomed to certain failure.

[Specialist]

Disagree 100%.

1. Downloads are, in fact, less expensive;

2. Bandwidth is expanding;

3. Content choices are expanding.

The video trend will mirror the iTunes model.

Jerry Jones
http://www.jonesgroup.net

Video lacks the cost advantage, suffers from bandwidth limit and the poor quality of faster downloads runs counter to the trend to bigger and higher resolutions TVs. And of course the studios have learned from the MP3 experience that if they allow movies to go the way of music, the'll continue to be making excuses for their lackluster sales - hence the heavy emphasis on DRM. CinemaNow is largely irrelevant due to long download times.

[oldandinthe way]

Considering how long it took me to find a setup which could burn a DVD with a reasonable certainty of playback on someone else's machine and having witnessed the hopelessly botched attempts of friends to do the same, I would say the whole idea of download-to-burn is doomed to certain failure.

Given the length of time you have been a member of this forum, I suspect you suffer from having been a pioneer.

Surprisingly enough, there are many people who buy a computer with installed DVDwriter and software, buy whatever media is on sale at the big box stores, and burn DVDs. Their computer supplier sends them automatic updates of the software and firmware, and if they have to buy any additional video software its a copy protection breaker.

I have had excellent results with reading my burned disks on every machine under 3 years old I've tried and many older machines - but not older SONYs.

[ntscuser]

I have had excellent results with reading my burned disks on every machine under 3 years old I've tried and many older machines - but not older SONYs.

Ditto here but then I'm a total geek who just spent four days and nights fiddling with a backup copy of the Japanese DTS version of West Side Story in PGCEdit in order to get it to playback on a Panasonic DMR-E50. The average download customer who doesn't read the guides at VideoHelp.com simply wouldn't know where to begin.

[festmaster]

Redbox came to my town a few weeks ago. That is the DVD kiosk that is in some MacDonalds and grocery stores. Their rentals are $1 per disk, you can check online to see the inventory of any kiosk, and if any kiosk has 2 or more copies of a particular movie you can reserve it before you head out the door. The closest Redbox to me is in a grocery store that shares a parking lot with a Blockbuster. I could see no reason to rent a multi-gigabyte download over a Blockbuster rental down the street so far. Now the Redbox makes the Blockbuster rental a second choice. I just don't see how movie rental downloads present an advantage to the customer.

[NiteLite]

The problem is that most people do not watch video on their PC, they like televisions especially those big screen ones.

Walmart is downloading content with Windows Media DRM10. Unless you hook your PC up to the TV - its watch it on your monitor or use a Media Player (tiny screen). If you do watch on your TV expect image to be inferior to DVD.

The problem with the online delivery concept is most people would prefer to download to PC and write a DVD. That is not provided. DVD quality is too long a download and studio piracy paranoia blocks it even for folks with plenty of time and bandwidth.

Walmart also warns you should back up the movie, but only allows yout to do that in a form which plays on the same PC it downloaded to.

The stock market says every company must be a player in the video download business, but no one will succeed using the technology approaches being implemented today.

Well stated.

The whole gang of providers are confused including me as a consumer.
They (especially Gates and company) want me to do my computer stuff on my TV and watch movies and other TV on my computer... Something's just wrong.

[MOVIEGEEK]

Disagree 100%.

1. Downloads are, in fact, less expensive;

2. Bandwidth is expanding;

3. Content choices are expanding.

The video trend will mirror the iTunes model.

A:
1.Yes and Noome "burn to disc" titles are less expensive than a store bought DVD but the downloaded rentals certainly are not cheaper.

2.Yes but it still takes an hour with broadband and if you factor in the time it takes to format and burn the file then add another hour.

3.Yes but it's no where near what Netflix or Blockbuster offer.

I doubt the average 30+ year old person will use downloaded video when there are easier alternatives such as Pay-Per-View or Netflix.
As others have stated:most 30+ year olds want to watch movies on their tv's sitting on their sofa not in front of their PC or iPod.

[Dv8ted2]

The site does not work in Firefox. This story was on digg.