eldavojohn writes "A year after opening its movie download service, Wal-Mart has abandoned the endeavor. They claim this is a result of HP's decision to stop supporting its video download store software. The article also notes that, unlike iTunes, Wal-Mart offered variable pricing which attracted a lot of studios. 'The world's largest retailer instead turned its rental service over to Netflix Inc. Wal-Mart still operates a music download service and continues to sell CDs and DVDs at retail stores and over the Internet for shipping by mail.' Is this evidence of the strength of unified pricing in media downloads or just another company being squished by the giant Netflix & Apple?"
While Wal-Mart has completely taken over small-town America, it is actively resisted by urban residents, and the company has been beaten back from establishing footholds on the outskirts of many city centers. See Fishman's The Wal-Mart Effect [amazon.com] for more on this division between success in some areas and defeats in others. City dwellers (therefore a fairly large amount of Americans), have shown that Wal-Mart's offerings aren't too appealing, and the company has had no luck finding a way into their hearts.
I think you're misjudging city dwellers. In my experience, whether or not Wal-Mart is really challenged depends almost entirely on whether or not there's an aggressive neighborhood association in the area where they want to build. In cities where Wal-Marts are present, they are generally always crowded, and presumably make good money. Here in Austin, which is admittedly not a huge metropolis but is a good sized city, there are already several Wal-Mart stores, and I guarantee none of them are hurting for cu
I think the GP isn't talking about suburbs but the actual city. We're talking full blown cities. I have friends who live in and around Chicago. They walk or take public transportation everywhere. Their local deli, the local grocery store. Have maybe 15 parking spots total. Walmart doesn't fit into this 'life style' You don't have 5 acres to put a 800 spot parking lot and a huge store. City dwellers are happy not having to drive anywhere. In the suburbs, you have a huge sub division with cookie cutter houses
If that were true, then the city wouldn't have needed to pass laws to make it impossible for WM to open up.
Chicago is surrounded by 42 Wall-Marts and the city-dwellers are exceptionally eager for WM jobs and services. Witness this from George Will's column on the issue:
This suburb, contiguous with Chicago's western edge, is 88 percent white. A large majority of the customers of the Wal-Mart that sits here, less than a block outside Chicago, are from the city, and
I never used the service myself, but apparently, the movies cost $20 each. For that price you could back up to DVD three times, but not to a format that played in a DVD player. Also, you didn't get the extras that typically come on a DVD. So you paid more money, for less content, that could be used in less places. And they wonder why it wasn't successful?
Compound that with the fact that there is probably a Walmart (or some other large dicount retailer) within 5 miles of your home in most major areas.
If I can get in my car, drive to the actual Walmart, buy the superior product for the same or often less than the one online, and be back at home in under 20 minutes... erm, why would I buy the DRM restricted POS online?
Honestly for me, irrespective of salary, a 20 minute savings would be worth at least $20 because I simply don't have much free time.
I guess I should feel lucky to have a job that lets me go to the grocery store. Where they sell DVDs. Often for less than $20.
Sorry, but the "I make $X per minute" thing is just silly in almost every case. You don't work 24/7. You are not getting paid for your non-work time. My wife does not pay me $40/hr to take out the garbage, does yours?
I just got a Tivo HD that works with unbox from Amazon. I think they have three different tiers of rental, a 24 hour period, some other deal, and a full on download and keep version. They seem priced fairly well, but oddly some movies are rental only or buy only. You would think they would all follow some scheme. And they include variable pricing schemes (some rentals are $1, some are $4). Online video distribution is slowly coming. They can't hold out forever. Music finally got here with itunes, video
Do they actually think Netflix squished something run by Walmart?
That's like saying the local burger joint is going to crush McDonalds! Sure, Netflix is a big company, but they're nothing compared to the Wally-world behemoth.
Sometimes a big company will try some new endeavor to much fanfare, but not bother to try very hard, assuming somehow that they will win because they are big. When that happens it's easy to take them out. Wal-Mart had no plan here; they just thought selling some videos at terms dictated by the studios might get them some cash. If they ran their retail stores that way, those would fail too, but they put serious effort into their retail stores.
they just thought selling some videos at terms dictated by the studios might get them some cash. If they ran their retail stores that way, those would fail too, but they put serious effort into their retail stores.
Actually, I can't find the source off hand but I've heard that WalMart has quite a bit of sway with their suppliers and can dictate to them how much they want things to cost or even packaging. So, what you're saying is that they ran this download store the complete OPPOSITE as their retail stores
I think it was "me-too" to copy Apple with iTunes... One of the things NBC cited was Walmart holding their DVD distribution channel "hostage" if the studios didn't do something about Apple raining on their in store sales parade of music and DVD sales. Walmart's business is selling commodity stuff, cheap. DVDs fit the bill perfectly as there is no variation (Spiderman 3 is the same anywhere) and Walmart has a better channel than a zillion little stores to control for the studios. Everybody wants to be par
Well, no, they don't. TFA makes mention of the fact that in 2005, Wal-Mart closed its DVD rental operation and handed off the customers to NetFlix. This download service is something completely different.
"Walmart is large, but it is horribly inefficient"
I hate my local Walmart as much as the next guy. And individual stores may be inefficient or suck. But the corporation as a whole is extremely efficient. I work in the trucking industry. Walmart is one of the companies that can afford to spend $1000 on an experimental MPG increaser. Whether it be APUs for the trucks, side skirts for the trailers, single tire rears, etc. If engine company X can provide.1 MPG extra per year on average, that's in the hundreds of thousands of dollars for Walmart.
They forced use of APUs on ALL trucks after doing a trial run. At a trucking conference they presented their savings broke even at 16 months. Now a ton of other companies are following their lead.
I thought I read on/. that they're going to RFID. As soon as Walmart forces RFID, maybe we'll see it everywhere. UPC is nice but old.
I don't have a lot of nice things to say about walmart, but that they're inefficient isn't one of them.
Yes. Auxillary Power Units. Depending on how vertically integrated the Chassis OEM is, it may be more than a generator. Sometimes the coolant is used as the heating fluid in the cab. Yes they are just generators mostly, but that's what the industry decided to call them. Because the 15L engine is the "Main Power Unit" this is the "Auxilary Power Unit"
California for 2009 has enacted STRICT Anti-Idling laws. Any more than 15 minutes idling and not in traffic, the engine must shut down. (Written into the engine
Walmart's problem is that "efficient" is not "unique". really look at the shelves and variety is gone.. they sell just 2 brands of most items, novelty items (toys, specific #2 name brands, back catalog of any type of media, etc) are the most generic version or scarce. They're good for staples (vegies, cereal, milk, bread), but poor for unique interesting things... the ones you get to mark up a bunch.. that's why Target is eating their lunch selling everything Walmart CAN'T because Walmart has beat up too
Don't forget the other key to Wal-mart success, all-in-one convenience vs. smaller retailers. For someone with kids in tow, being able to buy groceries and shoes and school supplies all in one place is going to be much easier. Another factor that has no baring on digital distribution. A harder to measure influence would be stigma. Wal-mart is anti-glamorous, Netflicks and iTunes are moderately cool.
Let's not forget that Wal Mart was the first to really push a large number of stores in medium-sized cities. My hometown (~10,000 people) has three other comparably sized cities within a 5 minute drive and then one much larger city within a 15 minute drive. All of the other chains were opening stores in the large city 15 minutes away when Wal-Mart opened one in my hometown and one in the larger city. Effectively, this made it so that one Sears had to compete with two Wal-Marts but, since each Wal-Mart targeted a smaller area, only one of the Wal-Marts competed with the Sears.
I read somewhere that 75% of all KMarts and Sears competed with a Wal-Mart, but only 33% of Wal-Marts competed with a Sears because of this strategy. When you can beat your competitors on price, location, and convenience, you're going to do well no matter what.
When the download becomes the same cost as buying/shipping physical media I think most Wal*Marx shoppers would rather have the physical media. Knowing a lot of people who WILLFULLY shop at their "super centers" and also Not so willfully work there, they are generally not the most technically inclined.
HP Dropping support sounds like a cop out... but a believable one
... they are generally not the most technically inclined.
When digital has no significant price advantage over physical the technically inclined may also prefer physical. Rip the DVD or CD at the fidelity you choose, re-rip in the future as technology improves, consider the disc a backup as well.
I'm also hesitant to consider someone who buys digital to be technically inclined. Most kiddies can manage that.
I agree. I'm very technically inclined (spending at least 8, but usually 12+ hours on the internet per day) and I always buy the physical/digital combination when offered. the physical media is faster and more portable for now and is an easy backup. If offered a choice between the digital and the physical, I'll choose the physical.
Is this evidence of the strength of unified pricing in media downloads or just another company being squished by the giant Netflix & Apple?"
I think this is evidence of businesses trying to be too many things to too many people and slowly discovering that no, you can't be everything to everyone. "Jack of all trades, master of none" indeed.
Exactly what I wanted to say, but you beat me to it. Wal-mart can only half-ass so many products before it finally catches up to them. This holds especially true with technical deals like this one (anyone can sell cheap Haynes underwear, but not everyone can sell digital content). You can't just throw money at something you have no expertise with and hope it makes money for you. You actually have to get involved and understand the technology that you are counting on to make you some money.
anyone can sell cheap Haynes underwear, but not everyone can sell digital content
That's only true if you assume that you can get cheap Haynes underwear in the first place. The reverse is true (at least for my skill set) when you consider how easy it is to set up a website compared to how hard it is to get the physical store, negotiate price with the supplier, buy from the supplier, distribute to the individual locations and manage the employees that are required to sell those products. Wal-Mart is exceptionally skilled at all those things and their size has made them even more so.
Well stated post. The quoted part of your response points to why Wal-mart failed at the digital downloads. Their skill set is in physical supply chains, like you stated. They are a fish out of water when it comes to exploring other delivery methods.
What? You're thinking of small business. Giant corps like Wal-mart have capital specifically set aside to try new things like this. Sure, this one failed, but others probably succeeded (for instance, they sell gas now at a lot of them, and that's a success).
The only reason that's a rule for small business is because it's easy to get ahead of yourself and waste away your time and money trying to do too much. If you're limited and don't have the money and man power to specifically go after something, t
While hindsight is 20/20... this is a classic example of an "Old media" company failing to adapt to the "New Media" because they didn't have any expertise in the current technology.
Wal-Mart's core competency is managing their supply chain. They make money by being the most efficient supplier of products that are in local demand. They operate their integrated technological systems marvelously. They don't know jack-shit about the internet and "download-able content". They should partner with Amazon to run their webpage... though that would probably start to enter into an anti-trust area.
Wal-Mart put some annoying restrictions on their movies. Here's a quote from their FAQ:
Due to licensing restrictions, you cannot copy or transfer your video files and play them on a different computer.
What if I want to watch movies on my laptop and my desktop? What if I decide to buy a new computer and can't watch my movies anymore? Wal-Mart should realize that people can just download a movie via P2P and not have to deal with any restrictions like this. I for one and much more willing to pay money for media if I can do whatever I want with it.
Is this evidence of the strength of unified pricing in media downloads or just another company being squished by the giant Netflix & Apple?
If you believe Wal-Mart's explanation, it sounds like this is caused by relying on single source software maintenance. Hey, software users: GPL is for you. It's not a hacker thing.
It's just a dumb business plan. Trying to do a downloadable media store without taking the iPod into account is like trying to market an office productivity suite that doesn't read/write MS Office docs: You're doomed to failure from the start.
If (and this is a BIG if) the movie studios wake up to the benefits of DRM-free downloads like some record labels have, the big winner here could be Amazon.com. They're uniquely positioned to equal, if not better the success that Apple has had. They're platform agnostic
You can't have a contract that compels another company to do something forever, that's just not practical.
I would bet they did have a code escrow agreement - in the event HP decided to back out of doing the software (which they did) WalMart gets access and use of all the HP source.
The fact that Wal-Mart is shutting down operations shows exactly what use code escrow is - jack and squat. What is WalMart going to do with a bunch of hacked together HP code, without any of the people who worked on it?
Plus in general a problem with code escrow is that you can't look at the source before you take it over to see how feasible that proposition really is.
In a statement, Wal-Mart spokeswoman Amy Collella said the company closed the store after Hewlett-Packard Co., which provided the software running the site, ''made a business decision to discontinue its video download-only merchant store service.''
Walmart fell victim to one of the classic blunders! The most famous is never get involved in a land war in Asia, but only slightly less well-known is this: never buy any kind of application software from Hewlett-Packard! Ha ha ha ha ha ha ha! Ha ha ha ha ha ha ha! Ha ha ha...
Seriously, HP has the worst cace of attention deficit disorder of any company I've ever seen. I've spent 25 years watching them announce "the next big thing" only to completely forget about it a year later after having sold it to three big customers (who are then completely screwed of course). Anyone who buys a proprietary solution from them at this point deserves what they get.
you made me think of my favorite piece of HP software - New Wave. I was even a New Wave "evangelist" for a while, trying to sell it to corporate users. I even still use my New Wave mousepad.
I refuse to download anything that has DRM on it. Especially considering that right *now* I buy my DVD's through retail channels and rip them myself (my country doesn't have DMCA idiocy preventing that) to the format of my choice. And when I switch around operating systems I don't fall into the trap of "sorry you're unsupported". Buying retail and ripping myself is what suits me best right now. Maybe when online retailers realize that DRM actually does nothing to stop piracy and only pisses off the people who actually do buy the product they'll drop it. And when/if they do drop DRM then I'll buy online instead of retail.
I get that DRM is bad for ownership, but how is DRM relevant at all if I'm RENTING a movie to watch one time. I'm not paying for the right to own it, I'm paying to rent it. I don't think I should be allowed to keep a copy on my video iPod, Zune, VCR, computer, DVR or any other device. This is where the anti-drm crowd starts to lose me.
Someone else pointed out that part of the issue is that Walmart sells DVDs already, and thus they were competing with themselves. I suspect they started the digital distribution because they realized long-term DVDs are dead. Even if a winner is ever found for Blu-Ray or HD-DVD, it might be too late now. Not that people won't buy them, but for most movies digital distribution seems likely to become the preferred method.
However, short-term, DVD is still king. So do they cut into their current sales for an uncertain future (can they really win against the other big-players?.. it's certainly out of their area of expertise), or do they go ahead with their current sales with the knowledge that they'll lose out later on? One thing to consider, their primary market is not exactly tech-savvy, and therefore will likely continue with DVDs for the next 10-15 years.
Another possible explanation, is perhaps they realized getting into variable-pricing was a mistake. If history gives us any lessons, the media companies are greedy bastards. They don't seem to give much thought into long-term planning. This is one case where the intelligence of Apple really comes through. They realized that unless they could control the prices, companies would try to charge more money than the physical media costs. I suspect after some grace period, in order to save face, NBC will come back to iTunes.
"I will continue to shop there because their returns policy is crazy-in-my-favor." Thanks for letting us know your price for doing something you don't like.
"think I have even taken back things that I purchased at another store." Ah, you lie and commit fraud, that explains it. You sir,are a Dick, and the reason places like wal-mart stop being customer friendly. You, and people like you, are the knife that is killing 'The Customer is always right.' policy.
However, there are a great number of us who don't have a boarders near by. We do have a Barnes and Noble, but it lacks the CD/DVD section that you find in other stores. All it has is book and a small cafe. There is the CD store in the mall, but their prices are jacked up and then Best Buy, which doesn't stock a lot of classical music.
iTunes, however, offers most of the tracks I want and with no waiting. Usually I can't get them any cheaper from Amazon. Plus there are a lot of times i don't want the w
Wal-Mart "squished"? (Score:4, Funny)
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I was gonna say.
You mean for once WalMart isn't the one doing the squishing? How'd that happen?
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It's hard to be all things to all people.
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Here in Austin, which is admittedly not a huge metropolis but is a good sized city, there are already several Wal-Mart stores, and I guarantee none of them are hurting for cu
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In the suburbs, you have a huge sub division with cookie cutter houses
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If that were true, then the city wouldn't have needed to pass laws to make it impossible for WM to open up.
Chicago is surrounded by 42 Wall-Marts and the city-dwellers are exceptionally eager for WM jobs and services. Witness this from George Will's column on the issue:
This suburb, contiguous with Chicago's western edge, is 88 percent white. A large majority of the customers of the Wal-Mart that sits here, less than a block outside Chicago, are from the city, and
Re:Wal-Mart "squished"? (Score:4, Insightful)
Parent
Cost and lack of extras the reason. (Score:5, Insightful)
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Compound that with the fact that there is probably a Walmart (or some other large dicount retailer) within 5 miles of your home in most major areas.
If I can get in my car, drive to the actual Walmart, buy the superior product for the same or often less than the one online, and be back at home in under 20 minutes
- Roach
Re:Cost and lack of extras the reason. (Score:4, Funny)
Parent
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I guess I should feel lucky to have a job that lets me go to the grocery store. Where they sell DVDs. Often for less than $20.
Sorry, but the "I make $X per minute" thing is just silly in almost every case. You don't work 24/7. You are not getting paid for your non-work time. My wife does not pay me $40/hr to take out the garbage, does yours?
And anyway
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Online video distribution is slowly coming. They can't hold out forever. Music finally got here with itunes, video
Squished? (Score:5, Insightful)
That's like saying the local burger joint is going to crush McDonalds! Sure, Netflix is a big company, but they're nothing compared to the Wally-world behemoth.
Re:Squished? (Score:5, Insightful)
Sometimes a big company will try some new endeavor to much fanfare, but not bother to try very hard, assuming somehow that they will win because they are big. When that happens it's easy to take them out. Wal-Mart had no plan here; they just thought selling some videos at terms dictated by the studios might get them some cash. If they ran their retail stores that way, those would fail too, but they put serious effort into their retail stores.
Parent
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Actually, I can't find the source off hand but I've heard that WalMart has quite a bit of sway with their suppliers and can dictate to them how much they want things to cost or even packaging. So, what you're saying is that they ran this download store the complete OPPOSITE as their retail stores
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Re:Squished? (Score:5, Interesting)
I hate my local Walmart as much as the next guy. And individual stores may be inefficient or suck. But the corporation as a whole is extremely efficient. I work in the trucking industry. Walmart is one of the companies that can afford to spend $1000 on an experimental MPG increaser. Whether it be APUs for the trucks, side skirts for the trailers, single tire rears, etc. If engine company X can provide
They forced use of APUs on ALL trucks after doing a trial run. At a trucking conference they presented their savings broke even at 16 months. Now a ton of other companies are following their lead.
I thought I read on
I don't have a lot of nice things to say about walmart, but that they're inefficient isn't one of them.
Parent
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Depending on how vertically integrated the Chassis OEM is, it may be more than a generator. Sometimes the coolant is used as the heating fluid in the cab. Yes they are just generators mostly, but that's what the industry decided to call them. Because the 15L engine is the "Main Power Unit" this is the "Auxilary Power Unit"
California for 2009 has enacted STRICT Anti-Idling laws. Any more than 15 minutes idling and not in traffic, the engine must shut down. (Written into the engine
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Wal-mart does what it does (Score:5, Insightful)
That is only half of what Wal-mart does (Score:2)
That is only half of what Wal-mart does, they are also very good at negotiating low prices from suppliers.
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Re:Wal-mart does what it does (Score:4, Insightful)
I read somewhere that 75% of all KMarts and Sears competed with a Wal-Mart, but only 33% of Wal-Marts competed with a Sears because of this strategy. When you can beat your competitors on price, location, and convenience, you're going to do well no matter what.
Parent
Re:Wal-mart does what it does (Score:4, Funny)
Parent
It's Walmart (Score:4, Insightful)
HP Dropping support sounds like a cop out... but a believable one
Technically inclined also prefer physical (Score:2)
When digital has no significant price advantage over physical the technically inclined may also prefer physical. Rip the DVD or CD at the fidelity you choose, re-rip in the future as technology improves, consider the disc a backup as well.
I'm also hesitant to consider someone who buys digital to be technically inclined. Most kiddies can manage that.
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Businesses are NOT swiss army knives (Score:3, Interesting)
I think this is evidence of businesses trying to be too many things to too many people and slowly discovering that no, you can't be everything to everyone. "Jack of all trades, master of none" indeed.
Focus on a specific market and DO THAT WELL.
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anyone can sell cheap Haynes underwear, but not everyone can sell digital content
That's only true if you assume that you can get cheap Haynes underwear in the first place. The reverse is true (at least for my skill set) when you consider how easy it is to set up a website compared to how hard it is to get the physical store, negotiate price with the supplier, buy from the supplier, distribute to the individual locations and manage the employees that are required to sell those products. Wal-Mart is exceptionally skilled at all those things and their size has made them even more so.
Un
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The only reason that's a rule for small business is because it's easy to get ahead of yourself and waste away your time and money trying to do too much. If you're limited and don't have the money and man power to specifically go after something, t
Outside the Core Competency (Score:4, Insightful)
While hindsight is 20/20... this is a classic example of an "Old media" company failing to adapt to the "New Media" because they didn't have any expertise in the current technology.
Wal-Mart's core competency is managing their supply chain. They make money by being the most efficient supplier of products that are in local demand. They operate their integrated technological systems marvelously. They don't know jack-shit about the internet and "download-able content". They should partner with Amazon to run their webpage... though that would probably start to enter into an anti-trust area.
Too many restrictions... (Score:2, Insightful)
Due to licensing restrictions, you cannot copy or transfer your video files and play them on a different computer.
What if I want to watch movies on my laptop and my desktop? What if I decide to buy a new computer and can't watch my movies anymore? Wal-Mart should realize that people can just download a movie via P2P and not have to deal with any restrictions like this. I for one and much more willing to pay money for media if I can do whatever I want with it.
All of Wal-Mart's eggs were in HP's basket (Score:4, Insightful)
It's neither (Score:2)
Trying to do a downloadable media store without taking the iPod into account is like trying to market an office productivity suite that doesn't read/write MS Office docs: You're doomed to failure from the start.
If (and this is a BIG if) the movie studios wake up to the benefits of DRM-free downloads like some record labels have, the big winner here could be Amazon.com. They're uniquely positioned to equal, if not better the success that Apple has had. They're platform agnostic
No contract with HP? (Score:4, Insightful)
Probably had code escrow but... (Score:4, Interesting)
I would bet they did have a code escrow agreement - in the event HP decided to back out of doing the software (which they did) WalMart gets access and use of all the HP source.
The fact that Wal-Mart is shutting down operations shows exactly what use code escrow is - jack and squat. What is WalMart going to do with a bunch of hacked together HP code, without any of the people who worked on it?
Plus in general a problem with code escrow is that you can't look at the source before you take it over to see how feasible that proposition really is.
Parent
My name is Inigo Montoya, you killed my software.. (Score:3, Interesting)
Walmart fell victim to one of the classic blunders! The most famous is never get involved in a land war in Asia, but only slightly less well-known is this: never buy any kind of application software from Hewlett-Packard! Ha ha ha ha ha ha ha! Ha ha ha ha ha ha ha! Ha ha ha...
Seriously, HP has the worst cace of attention deficit disorder of any company I've ever seen. I've spent 25 years watching them announce "the next big thing" only to completely forget about it a year later after having sold it to three big customers (who are then completely screwed of course). Anyone who buys a proprietary solution from them at this point deserves what they get.
G.
Re:My name is Inigo Montoya, you killed my softwar (Score:2)
DRM is what kills it for me. (Score:4, Insightful)
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Sales force (Score:3, Interesting)
However, short-term, DVD is still king. So do they cut into their current sales for an uncertain future (can they really win against the other big-players?
Another possible explanation, is perhaps they realized getting into variable-pricing was a mistake. If history gives us any lessons, the media companies are greedy bastards. They don't seem to give much thought into long-term planning. This is one case where the intelligence of Apple really comes through. They realized that unless they could control the prices, companies would try to charge more money than the physical media costs. I suspect after some grace period, in order to save face, NBC will come back to iTunes.
Nonono you got that wrong (Score:2, Funny)
Like this:
WALMART ONLINE MOVIES SUX0RZ
or if you liked the service
WALMART ONLINE MOVIES SHUTDOWN SUX0RS
See, that wasn't so hard, was it?
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Thanks for letting us know your price for doing something you don't like.
"think I have even taken back things that I purchased at another store."
Ah, you lie and commit fraud, that explains it.
You sir,are a Dick, and the reason places like wal-mart stop being customer friendly.
You, and people like you, are the knife that is killing 'The Customer is always right.' policy.
Dick.
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iTunes, however, offers most of the tracks I want and with no waiting. Usually I can't get them any cheaper from Amazon. Plus there are a lot of times i don't want the w