Wal-Mart's Video Download Service
Wal-Mart launched a beta-version of its video-download service this week, entering a rapidly growing space.
By one account, the system leaves a lot to be desired. But beta is beta; that's why it's called that. Kinks get worked out.
The real story here is what the presence -- finally -- of the world's largest retailer will mean to video downloads?
Wal-Mart's foray into digital downloads thus far has been frankly, and surprisingly, unremarkable.
The super-retailer has run a music-download site for three years where it sells songs for 88 cents each, undercutting Steve Jobs and his iTunes store by 11 cents.
That's what Wal-Mart does: uses its immense monopsony power to buy in volume and undercut rivals by price.
When Wal-Mart started selling digital songs, lots of folks predicted it would mean the ruin of Apple's service. Lots of folks were wrong.
Wal-Mart has not made the transition from bricks-and-mortar retail giant (that's their DNA -- getting people in stores, wandering among pallets of gallon-sized jars of pickles) to online retailer. Riddle me this: Did you even know Wal-Malt sold songs online? You know why? Probably because their songs aren't compatible with the most popular mp3 player -- the iPod.
Nevertheless, Wal-Mart is a major player in Hollywood: It is the studios's largest buyer of DVDs. Last year, while chasing this story, several Hollywood studio insiders told me this is why Jobs only got Disney (where he sits on the board) to sign up for his movie-download service last fall. The price he set for his movies -- $9.99 -- undercuts Wal-Mart's DVD price, which irritated Wal-Mart. (Don't like it when the foot's on the other hand, eh?) The other big studios -- Sony, Paramount, Warner Bros., etc. -- didn't want to tick off their best customer so they have thus far passed on joining Jobs's service.
Now, not surprisingly, Wal-Mart's service has all the major studios on-board. But Wal-Mart does not offer the easy-to-use techno-ecosystem that Apple does: buy a movie on Apple's iTunes and it plays on Apple's iPod, easy as pie.
This is shaping up to be a great retail battle.
What do you think? Have any of you tried Wal-Mart's movie-download service yet? Will you?
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