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Wal-Mart's Video Download Service

Frank Ahrens

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?

By Frank Ahrens  |  February 9, 2007; 2:25 PM ET  | Category:  Frank Ahrens
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Please email us to report offensive comments.

I believe the word you are looking for is "monopsony".

Posted by: Jim | February 9, 2007 3:46 PM

Typo. Fixed. Thanks, Jim!

Frank Ahrens

Posted by: Frank Ahrens | February 9, 2007 5:00 PM

Why shouldn't Wal Mart get good at download. Apple has it one way too long. European ruling could open technology. Go Wal Mart! Lower prices for everything benefits us all.

Posted by: Michael Kudla | February 9, 2007 6:21 PM

Wal-Mart's promise of lower prices comes at the high cost of lower wages and paultry benefits, which amount to the exploitation of the desperate. Always Low Prices means a race to the bottom, and Wal-Mart is one big snow ball. Thanks for the 11 cents, but I'd rather overpay a company like Apple that treats its employees with respect, than follow Wal-Mart's road to perdition.

Posted by: John Hendrix | February 9, 2007 7:52 PM

Please, don't hide your feelings about Wal-Mart and the Ma and Pa Kettle's that shop there... tell us how you really feel.

A couple of things --Wal-Mart doesn't have "pallets of gallon size jars of pickles" -- that would be Sam's Club, the warehouse subsidiary that competes with Cosco and BJs. But you wouldn't know that, shopping as I'm sure you do at the organic food store and the trendy boutiques in Georgetown.

Also, I'm confused -- how does Wal-Mart's "volume buying" and cheaper prices apply with digital downloads --do they get a lower price on the pallets of digital songs and movies?

Finally, I guess I'm not surprised that, according to you, we're all supposed to warship at the altar of all things Apple. Tell me, what will you write about when Steven Jobs resigns over the options backdating scandal? Will you write about corporate greed then?

Posted by: Brian | February 11, 2007 6:59 AM

Jobs hasn't resigned but Wal-Mart continues it's predatory ways and continues to exploit it's employees!

Posted by: Doug | February 12, 2007 11:23 AM

I just wonder if netflix won't jump in and strangle the wal-mart baby.

Posted by: chas | February 12, 2007 12:49 PM

Well I sorta tried it. I hit the link, but was told that I couldn't access the site because I wasn't using a Micro$oft browser. So much for Firefox, Mac, or any non IE user. So, my review... it stinks.

Posted by: Ralphie | February 12, 2007 3:51 PM

You should mentioned the geek outcry over at Boing Boing about the fact the beta site only works with Microsoft browsers (the site, when displayed in Firefox, looks like a Salvador Dali painting on acid - it takes talent to make a site render that badly). Not a smart move if you're try to attract the techie early adopters. Your article doesn't explain the format of the downloaded movie - where can I play? for how long? I would assume the usage rights are very restrictive?

Posted by: zingoat | February 12, 2007 8:49 PM

"Thanks for the 11 cents, but I'd rather overpay a company like Apple that treats its employees with respect, than follow Wal-Mart's road to perdition."

Chinese iPod factories work long hours for low pay and in "slave" conditions.

The article in the Mail alleged that workers received as little as £27 a month, doing 15-hour shifts making the iconic mp3 player.

Posted by: Bill | February 13, 2007 12:52 AM

no service for macs at biggie.

Posted by: Lucas Zuniga | February 13, 2007 2:23 AM

Didn't Apple start adding Paramount movies, like, a month ago? And they just added Lionhart (or Lion- something) this week.

Posted by: Baltimore | February 13, 2007 11:45 PM

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