Reports are coming out that Walmart is gearing up to offer movie downloads in the coming months. The impact of the move on pricing could be big; Walmart sells almost half of the physical DVDs bought in the US and the company could be a major player in the increasingly crowded movies-on-demand space. Walmart’s movie rental service was discontinued last spring and the company entered a partnership with Netflix to provide rentals to Walmart customers and promote purchase of DVDs from Walmart.
The Financial Times writes that a job posting from Walmart seeks a business manager for digital video who will define “pricing strategies to maximize market share.” Walmart is well known for using its market power to get the lowest prices of almost every other commodity on earth; whether it is able to budge the movie studios to lower their prices will be the biggest question.
CNN Money is reporting that the downloads may come in part through in store kiosks, which would be a very different service from the other major players like Amazon, iTunes and AOL. Movie downloads brought to market so far have not hit the low price that many consumers were hoping for and that’s presumably because customers are expected to pay for the convenience of downloads. That stay at home convenience wouldn’t be a selling point to consumers when it comes to in store kiosks. Walmart may also offer one download as back up for customers who buy physical DVDs from the company. I don’t expect anything terribly exciting here, but I’d love to be surprised.
Hmmm I don’t know about all that. Wallmart is playing catch up big time.
Johnny come lately. But sometimes Johnny can surprise us.
I wonder how Web 2.0 will factor into their sales equation.
I understand and see this is the hope for the industry…BUT…man, I’m not planning on downloading a movie from anyone, let alone walmart anytime soon.
–RC of strangeculture.blogspot.com
I am sure it will fail just like there rental try did. They are probably doing it so they can get a more favorable deal when they work with Netflix again, who is also entering that arena. Walmart is a reseller at the highest level not an innovator of “new consumer” technologies. They know how to run the tech backend of there insane super system of stores ( that’s alot of s’s) and they should stick with that.
Didn’t we have enough Online movie stores?
Hmmm… I anticipate it will have as much impact as their Music downloading service… slim to none!
I personally think they are in capasity to have an impact but again it depends on what they will come up with. The video market is very competitive area and if they are not going to do something that will make them different from their competitors it is going to be very painfull for wal-mart.
Dexter – I think the more stores there are the more likely it is that prices will drop. Ofcourse if the content providers don’t make it possible to compete when it comes to prices the only way of competition will be quality.
@Florian: Pricing really doesn’t have much to do with competition. The studios typically have a fixed price that they want to get per download, so there’s not much room for margins above and beyond the cost of delivery. Only in cases where service providers willingly price below cost and loose money – as in Guba’s case – is there flexibility, but it’s not sustainable.
We were speculating on wether WalMart would make an announcement in this space. I thought it would be nuts for them to do, given that their customers aren’t exactly early adopters. The kiosks might help. It still seems bizarre.
Another movie download. I am not entirely sure how would WalMart revolutionarise this area. Providing in-store kiosks might be good but consumers would rather just buy the DVD when they are in the store already.
@Chris – since the slogan of walmart is “always low prices” I would have thought that pricing is a factor for competition.
Don’t underestimate WM’s leverage.
WM’s ability to endcap (or feature) a DVD release can significantly impact sales of that title. WM’s decision to not carry a DVD title (because of limited shelf space) can greatly hurt sales.
Just one more online movie download store…
Wal-Mart is playing against its existing strengths of a great distribution network and has already got spanked on other pure-play online ventures that it has got involved in. The company does not have the brand equity to innovate in this way, still I guess their shareholders will like it and servers don’t want to have a union card.
Lets hope it will be cheap, that kind of pressure could reduce all the overpriced DVDs out there. Like one season of aqua teen hungerforce being something like 50 bucks. Great show, but 50 bucks? Isnt exactly the Godfather gold pack in there…
Will they also block so many of the more Rated R films?
It looks like Walmart is only trying to keep its customers rather than making money from the movie downloads.