With Wal-Mart Stores Inc.'s (NYSE:WMT) on again-off again decision to get movie content into the hands of customers, it isn't surprising that the world's largest retailer has again made the decision to offer movie downloads to its customers once again. Wal-Mart is attempting to try and battle online DVD purveyors Netflix Inc. (NASDAQ:NFLX) and Amazon.com Inc. (NASDAQ:AMZN), along with online movie download services such as Movielink.If you recall, Wal-Mart began to try and offer DVD rentals from its stores (and at its website) years ago but gave up and referred customers to Netflix before the program even got off the launch pad. It was odd to see Wal-Mart admit failure so quickly, but it did in that case.
Which brings us to Wal-Mart's current effort to get customers to download movies from its website. I see a few possibilities and pitfalls here: Wal-Mart likes to get customers in the doors at all times. DVD sales do that -- and Wal-Mart sells more DVDs than anyone else, an estimated 40% of all DVD sales in the U.S. come from the retailer.
At the same time, if Wal-Mart does not get feet in the doors by offering movie downloads -- which may cut into its DVD sales -- it can't get those customers buying other products (such as impulse buys and so forth). This is a quandary -- but if DVD sales are expected to decline (possibly), Wal-Mart's alternative way to get content to customers is going to be a requirement. And, of course, it won't stop selling physical DVDs in stores, probably ever.
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Reader Comments (Page 1 of 1)
2-09-2007 @ 11:50AM
Rick Hanley said...
There were 2 parts to Wal-Mart's announcement. The second part directly affects the dynamic behind Netflix's existence: there had not been any material monetization occurring for catalog films. This is the need that Netflix met. Then Blockbuster joined in meeting this need. And now see below for how many will meet the need and put Netflix to sleep.
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Red Herring
The Business of Technology
Wal-Mart Intros Movie Downloads
…Wal-Mart will use the foray into digital movies as a way to build a full-service online store aimed at home entertainment.
“We view this as the first step to move toward a multi-format and multi-channel strategy,” said Cameron Janes, director of digital media for Wal-Mart. “We are looking at leveraging the digital platform to support manufacturing on demand and offer a range of movie titles.” Those include independent films, foreign films, as well as hard-to-find titles.
Willem de Zoete, head of HP’s digital entertainment services business, said the company is building a business based on custom DVD distribution.
About 60,000 DVD titles will also become available through a mail-order service in which consumers have an option to go online and order the discs. The service will launch mid-year.
© 1993-2006 Red Herring, Inc. All rights reserved.
http://www.redherring.com/Article.aspx?a=21142&hed=Wal-Mart+Intros+Movie+Downloads#
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Cleared for Takeoff
Imagine in-store download and burn to DVD kiosks at Wal-Mart, Target, Best Buy, and/or Walgreens? Extremely cost effective availability of tens of thousands of titles. The content owners, retailers, and consumers all win. And the environment, too. No more online, physical DVD rental models that involve millions of physical deliveries each week.
What had been the key differentiator for Netflix, catalog films, will now be widely available to retailers. Clearly, we all want to see the day when in-home download is as easy as using the TV is today. That will come.
Video Business Online
DOWNLOAD-AND-BURN CLEARED FOR TAKEOFF
Movielink plans summer test with new CSS-enabled discs
By Paul Sweeting -- Video Business, 2/8/2007
FEB. 8 | The DVD industry has cleared the way for retailers and consumers to burn movie downloads to DVD for set-top playback.
The steering committee of the DVD Forum on Jan. 31 formally approved technical specifications for a new type of recordable disc for use with in-home and in-store burning of CSS-protected movies, removing the last remaining administrative hurdle to commercial deployment of download-and-burn services…
Online download services have been waiting for the approval to give consumers the option of burning movies they can now only play on their PC or portable device.
Studio-owned download service Movielink plans to begin testing burn-to-DVD downloads this summer and offer it to all consumers by the fall, chief marketing officer Mary Coller Albert said…
Wal-Mart also is said to be considering adding download-to-burn for its just-launched service.
“We expect that to improve over the course of the year, and we’ll continue to aggressively explore/evaluate opportunities and models for this option over the next year,” Wal-Mart said in an e-mailed statement…
With the final specs approved, disc makers can now begin manufacturing DVD Download blanks for sale to consumers and in bulk for enterprise applications such as in-store burning kiosks.
The discs are similar to standard DVD-R’s but are “pre-keyed” with CSS decryption codes so they can accept encrypted data.
The use of CSS—the same copy-protection system used on commercially pressed discs—is considered critical to ensuring that discs burned from downloaded movie files will be compatible with all set-top DVD players…
Initially, download-and-burn may be a bigger opportunity for bricks-and-mortar retailers that bring in DVD burning kiosks rather than for online download companies…
“In theory, it can be a very nice revenue generator [for retailers] without having to give up any kind of significant footprint,” Goodman said.
© 2007, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.
http://www.videobusiness.com/article/CA6415121.html