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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.

Wal-Mart's movie download strategy originally appeared on BloggingStocks on Fri, 09 Feb 2007 10:23:00 EST. Please see our terms for use of feeds.

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