Wal-Mart Stores Inc. (NYSE: WMT) has been the leader in DVD sales in the U.S. for years now. It's estimated that 40% of all U.S. DVD sales originate within the doors of the world's largest retailer. But, could those days be coming to an end?
With Blu-ray DVD players coming with built-in internet video streaming, cable and satellite having video-on-demand choices of all recent movies, and more people buying content from Apple Inc.'s (NASDAQ: AAPL) iTunes every day, what is the future of the physical DVD?
Entertainment companies don't want this -- it's a great source of profits that is really a nice monetary complement to movie-going cinema revenue. Nevertheless, Walmart is doing away with display cases that promote and sell the latest and greatest DVD releases. You'll generally find these near the entrance of most Walmart stores, as well as blocking the aisles of the home entertainment areas of most Walmart locations.
For Walmart, a shift like this signals that the world's largest retailer does not view physical media as a way to get shoppers in stores. Indeed, JPMorgan analyst Imran Khan indicated "We think the new strategy implies Wal-Mart no longer sees DVDs and Blu-ray discs as traffic drivers." For the reeling movie studio industry, this is a huge black eye. Walmart's main purpose is to move any and all product off shelves, into baskets and out the door as quickly and efficiently as possible.
If DVDs and even Blu-ray discs aren't wholly contributing to this, then away they go. Apparently customers don't really care that much about all the extras movie studios install onto DVDs as a way to build value. All customers have time for is the movie itself -- and the lowest price possible (even if that means a rental instead of a purchase).
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Reader Comments (Page 1 of 1)
10-07-2009 @ 3:47AM
Chris said...
You're reading way too much into this. Although everyone knows media formats are evolving & this will in some way impact Walmart and other retailers, the move away from video displays (the cardboard corrogate shippers) is for an entirely different reason.
One of Walmart's current company-wide projects called "Clear Action Alley Initiative" is removing all displays from the main aisles and front entrances in response to customer feedback and R&D. You will likely still find the same selection of DVDs and BluRays in a store after removing the displays as before, just with different placement and without the imposing advertising of the temporary displays.
This also is in-line with Walmart's "Environmental Sustainability Initiative" which focuses on reducing waste, including that from supplier packaging and displays.
DVD sales continue to be a huge percent of sales in a Walmart electronics department, with a disproportionatly large share generated by the new release videos.
10-23-2009 @ 12:33AM
Dave Straitjacket said...
I agree with "Chris" above. This *could* be a minimal step in the direction the article indicates but is more likely in line with the initiatives mentioned above.
Also, one complaint you consistently hear about Wal Mart is "I can't find any help". When those temporary cardboard displays expire - typically in a week, sometimes less if it's a really popular movie - SOMEONE has to take the empty display to the cardboard compacter at the back of the store and break it down to fit in, then mash it down.
This can take 15-20 minutes of time, more if someone else is ahead of you with a days worth of cardboard boxes from another area.
Of course, because the display is tied to the electronics dept., then it's the responsibility of one of their people to do it. Thus, one less SALES person on the SALES floor.
I would imagine shrieks of joy and squeals of delight emanating from the electronics departments chain-wide at this announcement!
Oh, and one more thing - Wal Mart can possibly negotiate a lower price for these movies with the studios since the studios will now have lower promotional expenses with Wal Mart. Maybe we should look for this tagline in future ads: "Save Money. Watch Movies. New Releases for less at Wal Mart."