Culture

by Carlo Longino




Why Is Wal-Mart Scared Of Apple's iTunes Movie Plans?

from the cheaper-cheaper-cheaper dept

A couple of months ago, we noted how Wal-Mart didn't like the idea of movie downloads, since it saw them as a threat to its DVD sales. Since the company sells 40% of the country's DVDs, it's got some stroke with movie studios, and apparently it's been doing the rounds ahead of Apple's supposed launch of iTunes movie downloads later this month, asking for lower wholesale prices and marketing help for when it launches its own download service. Apparently Wal-Mart is upset that Apple's been able to score movies for a wholesale cost of $14 each, and will sell new releases for $14.99 and older movies for $9.99, when it has to pay $17 wholesale. That $17 figure seems awfully high, given Wal-Mart's retail prices on DVDs, but it's possible it's using them as a loss leader. However, simply asking for lower prices isn't necessarily a great solution. While clearly Wal-Mart sees Apple as a threat, it's not clear that iTunes movies really will be one: if they're sold in the same format as its TV shows, they'll have a fairly small market, limited to owners of the latest iPods, really, since they don't look so hot on bigger screens (though it's possible Apple could announce new devices). Furthermore, Apple has apparently only secured a deal with one studio, Disney, hardly making its store comprehensive. If Wal-Mart really wanted to compete against digital downloads and protect its physical DVD sales, why not get behind tools that make it easy for users to turn physical DVDs into digital files they could move to their computer, or onto a portable player? Somehow, given the movie studios' hamfisted efforts at movie-download services, focused more on restrictions than usability, that seems rather unlikely. Perhaps it shouldn't be that surprising that apparently the only way Wal-Mart knows how to compete is on price.

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  1. identicon
    steve mart, 1 Sep 2006 @ 5:46pm

    Netflix will dominate

    mp3 is one thing. but downloading an entire movie to watch on a 4 inch screen? only the harden fanboys will do that. even compressed (meaning it'll look like crap on a large monitor), the movie will take up 2-3 gig. How many fanboys will carry around 10 movies on their video ipods?

    netflix, once they start streaming video rentals, will eat up this market. Imagine you can stream the latest movie to your laptop overnight, then copy it onto your video ipod and watch it. after 3 days, the movie automatically deletes itself...all for 3 bucks a movie.

    that's the winning business model.

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