updated 10:20 am EST, Tue February 6, 2007
Wal-Mart dwarfs iTunes
Wal-Mart today debuted its new Video Downloads store, representing the company's first video download service. The retail colossus also announced that it has successfully negotiated licenses with the six major American studios -- including Apple's close iTunes partner Disney -- giving it the largest catalog of any online video service. The store's launch will see an estimated 3,000 movies and TV shows, dwarfing the 600 available via Apple's iTunes Music Store. Wal-Mart said that it would keep its prices in line with its DVD catalog, and that costs will vary depending on launch dates as well as the profile of the release: new releases sell for between $12.88 and $19.88, while older movies will sell for $7.50. TV shows will sell for $1.96 per episode, essentially matching Apple's $1.99 TV show pricing.
Downloaded videos will also tie into Wal-Mart's other device sales. Although customers cannot write shows to movie DVDs, a relatively uncommon download system will give buyers both standard-ratio 480p movies as well as half-size versions for portable players, according to Electronista. The retailer warned, however, that not all content will offer both options.
Sales at the website will tie into DVD releases, offering discounts to those who buy both purely digital and physical copies of the same movie.
The move by Wal-Mart has already raised concerns from experts, according to the New York Times, who suspect that the sheer volume of releases may help Wal-Mart defeat market leader Apple. The retail giant has generally had poor results challenging digital downloads in the past, h owever, floundering in both its music downloads as well as its online DVD rental service.
"As much of an 800-pound gorilla as they are in retail sales, they are an 80-pound weakling when it comes to digital distribution," said the Yankee Group's entertainment program manager Michael Goodman.
Analysts suggest that Wal-Mart will need to drive online customers to its shops to prove successful, as the chain routinely shelves features of its website that fail to improve its core retail business. Goodman pointed to DVD rentals as an example.