Amazon Inc. (NASDAQ: AMZN) and TiVo have joined forces in the war to take the top spot in the realm of video content provision. Unfortunately, the team has opted to take a route which cuts personal computers out of the video-viewing loop. That's a sad miscalculation if you ask me.

It is reported that the Amazon-TiVo team will be directly selling movies, episodes of television shows and other video content for a price range of $2 to $4 for download directly to TiVo units with the "Amazon Unbox on TiVo" upgrade and high speed internet connections. This is a service which broke ground in February of this year and which at that time required users to choose their entertainment selections using a personal computer. It is my interpretation that the current move by this entertainment alliance, in making their venture "TiVo specific," is a misguided attempt to herd would-be video subscribers into the TiVo format and away from the worldwide video content web.

Bad move, limited scope, consumer inflexibility and restricted horizons are some of the verbiage that enter my thinking when considering this attempted move. As of right now, the Amazon-TiVo team indicates the availability of about 10,000 video selections for their service offering. Umm, excuse me for being so crass but it sounds to me like they're "spitting" into the wind.

Just take as a token indicator the fact that for someone to use this questionable service, they need to have a high speed internet connection. So, if you're going to go with a high speed internet connection to grab some video content why in the world would anyone restrict themselves to a selection of 10,000 viewing opportunities and bypass their personal computer in the process?

I myself wouldn't touch this scenario with a 10-foot fiber optic cable. That is, if I had one.

Amazon.com Inc. (Nasdaq:AMZN) and Tivo Inc. (Nasdaq:TIVO) are joining forces to allow people to download tv shows and movies from the Internet to their digital video recorders.

The service will be available to the 1.5 million people with TIVO DVRs with broadband capabilities later this year. The Associated Press said the companies refused to give a target date for its launch, which immediately makes me wonder if they are having technology problems. Still, this may video downloads attractive to people who don't want to spend hours watching videos over their computer screen.

Amazon launched its Amazon Unbox download service last year Wal-Mart Stores Inc. (NYSE:WMT) just got in the game. Of course, there's still a whole host of other services such as NetFlix Inc. (Nasdaq:NFLX), Movielink and CinemaNow. Apple Inc. (Nasdaq:AAPL) also full-length movies at iTunes. Plus, there are loads of sites that offer the content illegally.

So far, companies are more eager to offer video downloads than the public is to buy them. That may change as people get used to the technology but the law of supply and demand still holds. I expect that these services will become cheaper and that small sites will get squeezed out of business.

This is great news for consumers but the impact on investors won't be known until the market develops, which won't be for a while.

Wal-Mart (NYSE:WMT) has made enough mistakes recently that most of its competition may not be overly concerned when the company launches a new service.

That could be a mistake. Hewlett-Packard (NYSE:HPQ) is providing the technology for Wal-Mart to launch an on line video store and DVD-by-mail service. All six Hollywood studios have signed on: Universal (NYSE:GE), Paramount (NYSE:VIA), Disney (NYSE:DIS), Warner (NYSE:TWX), Sony (NYSE:SNE) and 20th Century Fox (NYSE:NWS).

The video download business is currently crowded with companies like Amazon (NASD:AMZN), Apple (NASD:AAPL), and private companies including Movielink.

NetFlix (NASD:NFLX) and Blockbuster (NYSE:BBI) have begun to move into the download market as they see their business of physical DVD rentals eroded by internet download operations.

If Wal-Mart is successful with the new service, shareholders at NetFlix and Blockbuster better duck.

Douglas A. McIntyre is a partner at 24/7 Wall St.