Wal-Mart Closes Online Movie Download Service

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?"

Cost and lack of extras the reason.

[Jason Levine]

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?

Squished?

[cheebie]

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.

Re:Wal-Mart "squished"?

[ByOhTek]

You beat me to it.

I was gonna say.

[...] or just another company being squished by the giant Netflix & Apple?

You mean for once WalMart isn't the one doing the squishing? How'd that happen?

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[account_deleted]

Comment removed based on user account deletion

It's Walmart

[techpawn]

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

Re:Squished?

[timster]

Sure they did. In this case, it wasn't even hard.

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.

Outside the Core Competency

[RobBebop]

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...

[log1385]

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.

All of Wal-Mart's eggs were in HP's basket

[Sloppy]

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.

No contract with HP?

[NonSequor]

Why didn't Walmart, of all companies, get a contract that insured that HP couldn't bail on them?

Re:Wal-mart does what it does

[moderatorrater]

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.

Re:Wal-Mart "squished"?

[eln]

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 customers. However, there is a neighborhood association in north Austin that has been trying to block a Wal-Mart from being built near them for close to two years now. What's odd about that effort is that the area Wal-Mart wants to build in is currently occupied by a dilapidated mall that is mostly empty and rarely sees much traffic. They claim that having a Wal-Mart there would drive down property values (although I have seen plenty of very upscale neighborhoods located right next to Wal-Marts) more than having a mostly empty run-down mall does now. Personally, I think if another discount store that wasn't called Wal-Mart wanted to build there, no one would have any issue with it.

Personally, I rarely shop at Wal-Mart mostly because it's always too crowded and the marginal savings on decent stuff (the really cheap stuff is almost universally garbage) isn't worth the hassle. However, I doubt Wal-Mart spends a lot of time worrying about how to make their stores less crowded for my benefit.

Re:Cost and lack of extras the reason.

[BrianRoach]

Exactly.

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?

- Roach

Re:Businesses are NOT swiss army knives

[moderatorrater]

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.

Unfortunately, the only thing that they can leverage from their retail success is their name recognition. Those things that make me love Wal-Mart evaporate in the digital world: their lenient return policies, multiple locations and low prices are all nullified by the fact that it's not a physical medium.

DRM is what kills it for me.

[headkase]

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.

letting the studios set the variable pricing....

[pxuongl]

Wal-Mart initially offered films from $12.88 to $19.88 and individual TV episodes for $1.96 -- 4 cents less than the iTunes store. Wal-Mart's online store sold older titles starting at $7.50, compared with the $9.99 charged by iTunes.

Many studios have resisted signing deals with iTunes in part because of Apple's desire to sell movies at one price. Studios prefer variable pricing such as Wal-Mart offered.

what's to note here is that films were offered between $13 and $20 a pop, with older titles at $7.50. When will it occur to studios, in regards to how variable pricing won't work, that if there is no demand for an "older title," then there will be no purchases, even if you sold them at a buck a pop.

the ones that are in demand, that people want to buy, are being sold at or above the price of a regular dvd! sounds more like the studios are trying to make a download service fail.

Re:Wal-Mart "squished"?

[Divebus]

Wal-Mart got squished by doing what the studios wanted, not what the consumers wanted.

Re:Unified pricing is short sighted.

[ducomputergeek]

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 whole album. I want 1 or 2 tracks. For $2 I can download and have it right there. For another $.50 (for the CD) I can burn to a CD-R and play it in my car.

iTunes was the first with an easy to use interface, pricing that made sense, and a flexible enough DRM that balances out what the studios wanted and fair use.

That's not quite the case with the video downloads. I bought season 3 of Battlestar Galactica last year because we didn't get SciFi at the time through the condo's cable plan. I backed them up to data DVD's when I switched to a new machine (and for archival purposes), but I can't go over to iDVD (or even DVD Studio Pro) and burn a playable DVD

Personally I like unified pricing. One of the reasons why I use Dish network is that they'll play hardball with the content providers over price. If CBS suddenly wants 30% more to air 7 channels that I probably don't watch anyway, Dish yanks the networks until the CBS folks come down on their price. I'd like to see Al la carte pricing since I could get by with about 20 cable channels that I actually watch.