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Wal-Mart threatens studios over iTunes

updated 05:30 pm EDT, Fri September 22, 2006

Wal-Mart threatens studios

A dark tide appears to be looming over digital movie downloads, as word came today that retailer colossus Wal-Mart has issued warnings of retaliation to some of Hollywood's key players, should they elect to sell movies through Apple's iTunes service. Wal-Mart last year sent back "cases and cases" of DVDs to Disney after the animation company announced it would offer episodes of its hit shows "Lost" and "Desperate Housewives" on iTunes, according to a report from the New York Post. Hollywood studio executives say Wal-Mart has threatened to strike back if they go into business with Apple, and though the Cupertino-based company is currently offering movies exclusively from Disney studios, other players in the movie industry want to follow in Disney's footsteps. "We all want to be in the Apple business," a high-level executive at a major movie studio said.

Apple's pricing of $9.99 to $14.99, however, falls below Wal-Mart DVD prices. Studios typically charge Wal-Mart $17.95 (wholesale) for new DVDs, but Apple is paying Disney roughly $14.50 wholesale for each movie. Hollywood studios don't wish to upset their largest sales outlet -- Wal-Mart -- just prior to the holiday shopping season, which is expected to rake in about $5 billion in DVD sales in the fourth quarter.

Wal-Mart executive David Porter, who oversees the stocking of the retailer's CD and DVD shelves, recently contacted numerous Hollywood studios to warn of "serious ramifications" if the studios pair up with Apple to offer digital movie sales.

"They threatened to hurt us in terms of buying less products," said one studio source.

That source also claims Apple CEO Steve Jobs asked Wal-Mart chief Lee Scott to moderate his stance during a recent phone call, according to the report.

"What they probably will do is not hurt Disney on new titles, but will buy less of their library titles," one source said.

Library titles constitute most of Wal-Mart's revenue from DVD sales, as the store usually cuts prices of new releases below cost in an effort to lure consumers to its shelves.

by MacNN Staff

(44)

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suhail
Senior User

Joined: Nov 1999

0

09/22, 05:50pm | report spam | close Reply |
s**** Walmart

I can wait for the day when they tank!

bullfrog184
Fresh-Faced Recruit

Joined: Sep 2006

0

09/22, 06:09pm | report spam | close Reply |
two can play at this game

it would be most unfortunate if shipments of the #1 family of digital music players failed to arrive at wal-mart, especially in time for the holiday season. :P how's that for subtlety?

this is ridiculous behavior, coming from wal-mart. the legal market for downloading movies is in its infancy, and if the legal music downloads is any indicator, people will continue to buying physical dvd's at wal-mart and other retailers for years to come. legal downloads are, and will continue to be, a small niche market.

jarod
Fresh-Faced Recruit

Joined: Apr 2005

0

09/22, 06:14pm | report spam | close Reply |
Hot air

Walmart will have no choice but to compete. All this bs talk is just that...BS. What they don't buy, Apple will sell, so there is no real loss to the movie industry. These are different times Walmart; get over it and deal with it.

UNTeMac
Mac Elite

Joined: Jan 2001

0

09/22, 06:19pm | report spam | close Reply |
common tactics

Walmart uses these tactics all the time. As the largest retailer, they frequently threaten or actually do stop buying a company's product if they don't do what Walmart says. They've put people out of business this way because companies, in order to be competitive, must use Walmart as retail outlet. Walmart demands a certain price, and they get it.

legacyb4
Mac Elite

Joined: May 2001

0

09/22, 06:20pm | report spam | close Reply |
unbelievable tactics

amazing that a single retailer, even walmart, can be so openly aggressive without fear of retaliation. didn't another big company get in trouble for something along these lines... 'use us or you don't get to play with us'?

Andy Cotton
Fresh-Faced Recruit

Joined: May 2003

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09/22, 06:22pm | report spam | close Reply |
wow

Isn't that anti-competitive in some legal sense? Only a monopolist could hope to wield such power. otherwise won't everybody just get their movies elsewhere? If I were a studio I would look to the future, not the past.. When this goes international the sales can only spiral up. And up.

jpellino
Fresh-Faced Recruit

Joined: Oct 1999

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09/22, 06:26pm | report spam | close Reply |
Ask vlasic pickles...

... how this works. Walmart's demands and retailation drove their profits down even as sales went up. The eventual path for Vlasic was receivership.

Their scale is truly staggering. The business that Home Depot does in a year, Walmart does in three months.

Until the market shifts to downloads, Walmart has the biggest lever. When it finally shifts, though - they'll need to be in the pile or under it. They're likely looking at the relative success of iTunes and their download service and realizing they can't afford to be nice this time.

ianaberle
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Joined: Dec 2005

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09/22, 06:29pm | report spam | close Reply |
Walmart's Market Share

I think I heard on NPR this morning that 40 percent of all DVD sales are through Walmart. With that selling power, they can do what they want. What is interesting how they are singling out Apple. I have not heard anything about the studios using Amazons or others services getting this type of treatment.

JulesLt
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Joined: Jul 2005

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09/22, 06:30pm | report spam | close Reply |
Ordering less DVDs

Well, of course, if they're going to sell less, they will order less, but unlike suppliers of chickens, tomatoes and potatoes, Wal-mart have a problem with movie studios. They can't get the SAME product from a rival. Sure, they can threaten to promote Dreamworks animations over Pixar, but consumers generally go out to buy a specific DVD and if Walmart don't stock it, they will go to Target or Amazon.

What they don't do at Xmas is get the kids a completely different film because Walmart had a hissy fit and refused to stock 'Cars'. And if they start refusing to stock a good library of back-catalog titles, they will drive consumers towards downloading - which is far better suited for that 'long tail' market.

firebird06
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Joined: Sep 2006

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09/22, 06:38pm | report spam | close Reply |
Oy vey

I work for Wal-Mart (not exactly happy of the fact, but in college, you take what you can get) but they pretty much secured that I won't buy anything I can get somewhere else from them by making this move. and clearly Disney doesn't care, they iPod seems to be doing more for them then Wal-Mart currently is.

suhail
Senior User

Joined: Nov 1999

0

09/22, 06:45pm | report spam | close Reply |
Walmart movie

Checkout this walmart movie: http://www.walmartmovie.com/

macbones
Fresh-Faced Recruit

Joined: Jul 2006

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09/22, 06:45pm | report spam | close Reply |
what if they ALL walk?

So what if all the studios sign with iTunes? I guess Crapmart will stop selling DVDs all together? Like h***. The studios should tell Wallmart to suck their @ss.

bobolicious
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Joined: Aug 2002

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09/22, 06:53pm | report spam | close Reply |
Apple could be worse...

...if/when they gain control...? Unilateral rights revokation is built into the DRM, and it is pretty difficult to know just how much information 'big brother' collects through online sales & distribution...

I still buy CDs & I urge everyone to do the same - DVDs hold much more than 640x480 video as well... ;-)

Andy Cotton
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09/22, 07:06pm | report spam | close Reply |
bobo@paranoia.com

I know people who work at Apple. Hard to believe maybe, but not everybody gets up in the morning thinking how they can s**** you over. Apple has historically generally done the right thing. That's why things like macnn exist. Can you imagine if Microsoft had the same leverage? Then I'd worry.

Cec
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09/22, 07:10pm | report spam | close Reply |
Juleslit

Very astute points!! I agree wholeheartedly. If a significant number of studios see this as a Wal-Mart wake-up call, they can bypass Godzilla and dine with Apple instead.

Let's hope that they do!

slider
Mac Elite

Joined: Oct 1999

0

09/22, 07:12pm | report spam | close Reply |
The fear is real

Wal-mart stands to lose. Sure, you get better rez off a DVD now, but I think Wal-mart understands the impact online sales of movies will have on them in the future. This is not a new announcement, and I'm sure if it was not for Wal-marts stance the iTS would have introduced more movies right off the bat. So at best it's a delaying effect. For every song, for instance, sold I iTS, is a song Wal-mart does not profit from. As SJ pointed out in his keynote, Wal-mart is number one, and as someone here point out, Wal-mart does more biz that Home Depot, so I'm sure they (wally) has a pretty good idea about what kind of losses they are looking at. In the end, Wal-mart really has nothing to lose by trying this delay tactic, they'll lose more if they don't try.

::maroma::
Addicted to MacNN

Joined: Jan 2002

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09/22, 07:35pm | report spam | close Reply |
Wal-Mart dreaming

This is just posturing. Wal-Mart has to flex their muscles because it is looking into the future and seeing their incredibly huge profits dwindling. They see technology moving in one direction very quickly, and traditional commerce standing perfectly still. Wal-Mart has no intentions of radically changing their business model to keep up with technology. So what do they do? They stifle the technology so they can survive longer. What else are they going to do? Close down their stores and turn into another Amazon? h*** no.

But even the mighty hand of Wal-Mart cannot stop the evolution of technology and commerce. They will eventually either be forced to change or they will whither away and become nothing more than another K-Mart. The latter will more than likely be the case. Because no one can stop technology. Many have tried, none have succeeded.

ender
Junior Member

Joined: Mar 1999

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09/22, 07:40pm | report spam | close Reply |
Go Target, not Apple

If Wal-Mart doesn't sell a DVD, it will NOT drive consumers to iTunes. It will drive them to Target or Best Buy. And to juleslt's point, this is very different than the Vlasic pickles example. Wal-Mart can go get pickles from another supplier. And if that supplier can provide Wal-Mart a pickle the consumer wants, and do it cheaper than Vlasic, great for them! But Wal-Mart can only get Narnia from one place. And if the consumer wants Narnia, they aren't going to buy Groundhog Day instead. They are going to go to someplace else to buy Narnia.

This will in NO WAY impact Apple's sales of digital downloads, and can only hurt Wal-Mart sales and reputation.

abnyc
Fresh-Faced Recruit

Joined: Sep 2000

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09/22, 07:58pm | report spam | close Reply |
typical

this is called collusion also exclusionary contracts. microsoft used to do that too. they were sued and found guilty. very illegal in america to employ such a lowlife way of doing business. just sad really.

scotty321
Fresh-Faced Recruit

Joined: Nov 1999

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09/22, 08:01pm | report spam | close Reply |
Wal-Mart is evil

First of all, isn't this ILLEGAL for Wal-Mart to be doing this?

Second of all, Wal-Mart is one of the most evil corporations on this planet. And I don't mean that as a hyperbole. I mean that as a fact. They have done more destruction to human lives, neighborhood communities, our environment, and other businesses than 90% of other companies out there. They are right up there with Monsanto and the oil companies as EVIL INCARNATE.

You can see it with your own eyes in the documentary:

Wal-Mart: The High Cost of Low Price http://www.walmartmovie.com

Watch it, and see what Wal-Mart has done to people's lives.

itguy05
Forum Regular

Joined: Apr 2005

0

09/22, 08:06pm | report spam | close Reply |
If the studios were smart

If the studios were smart, they would tell Wal-Mart to F-off and stop selling DVD's to them. Then ensure that Target, Best Buy, Circuit City, K-Mart, etc all have PLENTY to go around.

Then take out a couple ads telling everyone that since Wal-Mart is not selling DVD's any more that they can get all their favorites at Target, Best Buy, etc.

Guess what? You've kept your sales and you also get to F-Wal-Mart.

Oh Well, I'm doing my part - I shop at Target. I _HATE_ Wal-Mart and their customers.

CobraNT
Dedicated MacNNer

Joined: Aug 2003

0

09/22, 08:53pm | report spam | close Reply |
c***....

c*** tactics....from a c*** company. Just shows the lack of business savy and marketing sense from Wal-Mart.

ktriplett
Fresh-Faced Recruit

Joined: May 2001

0

09/22, 09:15pm | report spam | close Reply |
Turn About is fair?

What if Steve Jobs responded off handedly to a reporter's question as follows:

"What if a movie studio threatened to stop selling at Wal Mart? What if several movie studios threatened to stop selling at Wal Mart? What if all movie studios threatened to stop selling at Wal Mart before the upcoming Christmas season? What would that do to Wal Mart's profits?"

I undertand that Wal Mart uses DVD's to entice buyer's into there stores to make other profitable purchases. If the movie studios stopped making the DVD available, how would Wal Mart react?

poulh
Mac Enthusiast

Joined: Jun 2000

0

09/22, 09:21pm | report spam | close Reply |
got to love competition

this might hold movie studios away for awhile, but the writing is on the wall that downloads will eventually become the future... look at on-demand at your cable company. walmart is just doing what it can to keep from cutting prices, but at least for now, i don't think they have to worry. i'm not too impressed with the movie store. the dvd's will look good on my non-high def tv which is great, but i rent movies, not buy them (i do buy music). so i won't be buying any movies from apple or walmart... i'll keep my netflix for now. however, once i can rent them over apple's iTV that's a whole 'nother game. either way, walmart isn't being 'evil' they are just trying to protect their revenue.. i'm sure any other company would do the same thing.

ccsccs7
Mac Enthusiast

Joined: Nov 2001

0

09/22, 09:26pm | report spam | close Reply |
DVDs

I get most of my movies from the library (free), unless it's something special.

I can't help but notice how anti-competitive this move is. After reading all about this kind of stuff in a book, I worry that it might be a bit biased, but reading about it (practically) first hand (and post reading so much already) is shocking.

bsaxton
Fresh-Faced Recruit

Joined: Jan 2000

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09/22, 10:40pm | report spam | close Reply |
Its a cut-throat world

I just have to think this is a rebellion against the online distribultion movement. They don't have a piece of it and they're doing the only thing they can. In the end, technology will win - whether Apple, someone else, or a combination of offerings. Walmart may do better to put big money into its own online distribution.

boazh
Fresh-Faced Recruit

Joined: Jul 2004

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09/23, 12:08am | report spam | close Reply |
Ban Walmart

nuf said.

TheBum
Mac Enthusiast

Joined: Sep 2001

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09/23, 12:29am | report spam | close Reply |
extras and resolution

There are two places where DVDs have an advantage over iTunes digital downloads:

1. DVDs have extra features that a digital download doesn't have (featurettes, outtakes, commentary, etc.)

2. 16x9 widescreen DVDs have a higher visible resolution (480 lines) than the iTunes 16x9 widescreen movies (360 lines; the rest of the 120 lines are black).

Given these two facts, I certainly won't be favoring digital downloads over DVDs. I wonder if Wally World has thought of that viewpoint.

bladderwrack
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09/23, 01:20am | report spam | close Reply |
lemme see...

if I get this right: wal mart is afraid of selling fewer dvds so they're threatening... to sell fewer dvds. got it.

Deal
Mac Enthusiast

Joined: Apr 2001

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09/23, 01:46am | report spam | close Reply |
I see plans within plans"

Wal Mart is stupid smart.

First off, if I want a movie and Wal-Mart doesn't have it, I go to K-mart, Shop Ko... Amazon, wherever. Who cares. Wally World just stand to loose money in the short term on this deal.

However, Wal-Mart wants their own movie download service just like they want music download and everything else. They just need more time to make it happen. If iTunes gets this big of a jump on them, they will fail to make it happen. They are just trying to keep Apple's lead to a minimum. And they will fail. When Disney cashes in on this, others will follow.

maccentric
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09/23, 05:03am | report spam | close Reply |
Wal-Mart?

Mal-Wart is more like it, lol (sorry, couldn't resist, won't happen again)

LouZer
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09/23, 08:36am | report spam | close Reply |
Umm

Just wondering, but how is this that different then Steve Jobs basically forcing the music labels to 99 cents a song, even though they've said they want variable pricing?

porieux
Baninated

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09/23, 10:16am | report spam | close Reply |
s**** wal mart

who the h*** goes there anyway??

markclausing
Fresh-Faced Recruit

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09/23, 10:28am | report spam | close Reply |
no respect

wal mart doesn't respect it's customers' freedom of choice and tries to stop a service in a totally different ballpark.

it's so sad those companies grow god-complexes. next step they hire an army to conquer hollywood.

digital content is perfect for digital distribution. wal mart is playing the anti-innovation, anti-consumer role. just a matter of time before they fall down. hard.

icecrystal23
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09/23, 12:05pm | report spam | close Reply |
Reply to louzer

"Just wondering, but how is this that different then Steve Jobs basically forcing the music labels to 99 cents a song, even though they've said they want variable pricing?"

Well, for one thing Steve's move was beneficial to the consumer. Wal-Mart's move is (as many have said) anti-competitive and thus negative for the consumer.

But I agree that it's the same kind of strong-arm move, just the we (as consumers... and mac lovers) were more accepting of Jobs strong-arming since it benefitted us.

whackjob
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09/23, 01:31pm | report spam | close Reply |
F**K WM

Sorry I have nothing profound to say in a few lines so simply put F**K walmart and ANY one who will support this business. (I feel better that I've NEVER been in one).

whackjob
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09/23, 01:38pm | report spam | close Reply |
RE:Reply to louzer

"Just wondering, but how is this that different then Steve Jobs basically forcing the music labels to 99 cents a song, even though they've said they want variable pricing?"

It's different because SJ doesn't believe we should pay more than 99c per song. Would you buy if the track is $1.25 ?

iTunes has put some life back into music business and is the ONLY service to put a dent in illegal downloads (not eliminate mind you) and now that the record suits have a taste, well, they want to get greedy.

They should be grateful for iTunes in many respects.

holstien
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09/23, 04:36pm | report spam | close Reply |
Isn't this anti-trust?

This sounds anti-competitive to me. While I have no love for the MPAA, I don't think Mal-Wort should be allowed to leverage it's monopoly to price gouge consumers.

It's sort of funny that when they wipe out local economies, they claim it's because other business refuse to compete, but then get all upset when someone else tries to actually out-compete them.

LouZer
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09/23, 10:23pm | report spam | close Reply |
Re: Reply to louzer

Well, for one thing Steve's move was beneficial to the consumer. Wal-Mart's move is (as many have said) anti-competitive and thus negative for the consumer.

It's different because SJ doesn't believe we should pay more than 99c per song. Would you buy if the track is $1.25 ?

But you make it seem that Jobs is concerned about the consumer ("He doesn't believe people would pay $1.25 a song") But isn't that just as self-serving, as what you won't buy will cost Apple. And if you believe that the iTMS is around to push iPods, that could then lead to fewer iPod sales. And, then, its a company (apple) strong-arming an industry to protect their business.

And someone who's pro-Walmart (just as some of you are pro-Apple and, as such, have views skewed more toward that side), could say that this move is pro-consumer, as the current state of movie downloads is as expensive as DVDs, more restrictive than DVDs (no burning copies), less quality, and less features.

There is nothing about digital movie downloads that's good for consumers (now if they did rentals, that might be different, but that would end up more like a subscription service and we all know no one wants a subscription service)

ender
Junior Member

Joined: Mar 1999

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09/23, 10:39pm | report spam | close Reply |
Re: Reply to louzer

The reason this is different than Apple "strong arming" the music labels is that Apple does not tell them who they can and can not do business with. They never threatened to stop selling songs on iTunes if they did business with Napster, or any of their other competitors.

Think about it, Microsoft didn't get in trouble for the pricing they charged PC manufacturers for Windows. They got in trouble for forcing those manufacturers to NOT install software which competed with MS products on those computers.

Deal
Mac Enthusiast

Joined: Apr 2001

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09/23, 11:26pm | report spam | close Reply |
louzer, it's simple

Any business in the world wants to get their ware at a good price so they can sell their product at a fair price. This is true for bananas, cars, squeegees and yes... downloadable music.

Jobs not only wanted a fair price, but a simple price structure. You don't have to jump on line to figure out what that song is going to cost. It's simple. 99 cents. That is all he wanted and nobody was getting hurt by such a move.

Wal-Mart wants to force their provider into not selling through another distribution channel. That means you and I couldn't go on line and buy that movie. That hurts me and you and Apple and anybody else who will eventually follow suit.

The funny thing is, Apple is not the only one doing this. Amazon is already selling movies but Wal-Mart has said nothing about that.

I suggest people write Wal-Mart regarding this move. Let them know that large numbers of people are watching their wretched moves closely.

ronjamin
Baninated

Joined: May 2002

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09/24, 05:24pm | report spam | close Reply |
ANTI-TRUST RAMIFICATIONS

This action by Wal-Mart may be in direct violation of Anti-Trust laws.

Wal-Mart comes in like a vampire and sucks-up our open space up, drives local mom-and-pop stores out of business, and in a discriminatory practice largely ignores the inner-city, yet they justify it as free market and they love it.

But when another businesses free-market plays, they whine like a bunch of pussies...... Time to break Wal-Mart up. They have too much power, control too much industry and employment, and are a direct impediment to lively business competition.

The fact is that before I can buy and burn videos from iTunes, my purchases from WalMart will be the same.

Fast iBook
Fresh-Faced Recruit

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09/24, 07:05pm | report spam | close Reply |
Cry babies

Wahhhh, i found something where i'm on a level playing field with my competitors wahhhhh. Hey, i know, i can be a bully and try to scare people into ditching the competition! Wal-mart is the single worst thing to happen to the american economy since microsoft introduced windows OS based on a stolen GUI. Unrestrained greed and power trips result in a loss of quality and product offerings for the customer. The customer is always right. I would never shop at a wal-mart, but if i did regularly and i found out about this nonsense i'd stop shopping there. I could go on the resat of the day about this. Greedy...

spaceagedevice
Fresh-Faced Recruit

Joined: Sep 2006

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09/25, 01:25am | report spam | close Reply |
???'s and viewpoint..

1.) I wonder how many Widescreen movies Wal-mart sells vs. Fullscreen movies? 2.) I wonder what the average IQ is of the Wal-mart shopper that just spent $1000-2000 on that new HDTV "Widescreen" TV only to buy fullscreen movies? Wal-mart and sometimes, it's customers, just don't make any logical sense. Movie downloads will not replace DVD's, nor the DVD consumer. I think there are a good # of people that are intelligent enough to know the difference between "iTunes movies specs vs. DVD specifications", and most of them probably don't shop at Wal-mart. Now for me, I've got a new 20" iMac that I watch ALL my movies on and also use as a media hub. OsX Front Row, iTunes and third party Media Central, are ready for the future of MY home entertainment. Still, I have yet to update my home entertainment equipment for the first time.(HDTV, surround sound) Apple is onto a very good thing in my opinion, and are smart in not taking over the DVD consumer. I can't wait for more iTunes movie releases, especially when Apple's iTV comes out in 2007. Welcome to the 21st century Wal-mart. You died in the 20th century with Sam Walton along with fullscreen VHS tapes. End of message.

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Wal-Mart threatens studios over iTunes

updated 05:30 pm EDT, Fri September 22, 2006

Wal-Mart threatens studios

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s**** Walmart

two can play at this game

Hot air

common tactics

unbelievable tactics

wow

Ask vlasic pickles...

Walmart's Market Share

Ordering less DVDs

Oy vey

Walmart movie

what if they ALL walk?

Apple could be worse...

bobo@paranoia.com

Juleslit

The fear is real

Wal-Mart dreaming

Go Target, not Apple

typical

Wal-Mart is evil

If the studios were smart

c***....

Turn About is fair?

got to love competition

DVDs

Its a cut-throat world

Ban Walmart

extras and resolution

lemme see...

I see plans within plans"

Wal-Mart?

Umm

s**** wal mart

no respect

Reply to louzer

F**K WM

RE:Reply to louzer

Isn't this anti-trust?

Re: Reply to louzer

Re: Reply to louzer

louzer, it's simple

ANTI-TRUST RAMIFICATIONS

Cry babies

???'s and viewpoint..

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