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?"

Businesses are NOT swiss army knives

[mcsqueak]

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.

Focus on a specific market and DO THAT WELL.

Re:Businesses are NOT swiss army knives

[stewbacca]

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.

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[account_deleted]

Comment removed based on user account deletion

Re:Wal-mart does what it does

[Original Replica]

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.

Re:Squished?

[hedwards]

Honestly, your analogy is horrid. Netflix is the leader in the rent movies by mail model, and Walmart isn't a leader in anything at present.

Walmart is large, but it is horribly inefficient, led by executives which willingly painted themselves into a corner, hated by pretty much all communities, and so this sort of thing is going to be more common in the future. That is unless they figure out how to run an efficient business. These sorts of ventures are more important to Walmart than they would be to a better run retailer.

And yes, I do know what I'm talking about, the business ran for a number of years based upon lower than normal supplier prices, with that evaporating, and some suppliers charging more because its walmart, they're in a bit of a bind. It gets worse that they also have to deal with being further away than other retailers, paying more for labor than most other retailers.

As their competition continues to catch up in their only area of strength, I would be surprised if their cap didn't start shrinking in the future.

My name is Inigo Montoya, you killed my software..

[Gavin Scott]

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.

G.

Re:Wal-Mart "squished"?

[0100010001010011]

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 and 2.5 children per house. No public transportation nothing. If you have to drive somewhere, you're probably going to want to drive one place rather than 100. This is where walmart is thriving. As population density drops it makes more sense.

And yes, Chicago hates "Big box stores" because they're not union. Target, Meijer, Walmart, etc. They're all non-union and I don't think a single one is within City limits (there wasn't last time I checked).

Sales force

[abes]

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.

Re:Squished?

[0100010001010011]

"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.

Re:Wal-Mart "squished"?

[MBraynard]

Walmart doesn't fit into this 'life style'

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 more than 90 percent of the store's customers are African American.

You can read the full column here. [jewishworldreview.com]

Every political criticism of WM - everyone of them that I have ever heard - is a lie.

Probably had code escrow but...

[SuperKendall]

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.

Re:Squished?

[mabhatter654]

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 part of Walmart's success.. big media, Microsoft, etc... it lets them get whatever they want to try out.

Re:this is just wrong.....it can't stand

[mabhatter654]

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 many people and demands too much in their favor to be "efficient".

Re:Cost and lack of extras the reason.

[BrianRoach]

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?

And anyway ... if you have no free time, then you don't have time to watch movies anyway. Problem solved.

(On a serious note, if you literally have a schedule so full that taking 5 minutes to buy a DVD is an issue ... you might want to re-think whatever it is that you're doing. It can't be healthy.)

- Roach

Wal-Marts Movie Download Service

[iviagnus]

I'll tell you the reason at least one person (moi) didn't attempt Wal-Marts Movie Download Service beyond the first try . . . it didn't work with my non-IE browser (yes it's in the top three most popular). I expressed this concern to Wal-Mart through email, essentially stating that they should be producing web pages that adhere to W3C standards so that all browsers will work, and got back the standard auto-response. You know, the one that basically states, "We want it to work so we can take all your money and it doesn't, but we don't care if you know the reason it isn't, we'll keep doing it our way just the same." You know, that response.