Wal-Mart Closes Video Download Service

After a year, Wal-Mart has abruptly shut down its online video download service, claiming Hewlett-Packard discontinued the technology that powered it.

Mega-retailer Wal-Mart has folded another of its online media sales effort, this time shuttering its one year-old online video download service with no warning to customers. A message on the site says the service shut down on December 21.

Via e-mail, a Wal-Mart spokesperson told Reuters the company was shuttering the service because Hewlett-Packard had discontinued the technology driving the service, and Hewlett-Packard has said it has ceased its download-only merchant services because the market for downloaded media "did not perform as expected." However, industry watchers are quick to blame the demise of the Wal-Mart video store on price pressure and digital rights management technology, which often makes media purchased though outlets like Wal-Mart’s video store difficult to use.

Wal-Mart is not offering refunds to customers who purchased media through the store. Wal-Mart says that customers who purchased media through the store will be able to play the content as many times as they like on the computer they used to download the files; however, customers will not be able to transfer the content to other computers, although in some cases customers may be able to transfer the content to portable players. For customers who expected that they "owned" the content they purchased through Wal-Mart, the knowledge that they can use the content only as long as they keep using the particular computer they used to download it may come as a bit of a shock. Wal-Mart does say customers no longer need the Wal-Mart Video Download Manager to view movies; they can use a plain-old Windows Media Player if they like.

Wal-Mart launched its online video store in February 2007, amid hype that the retailer’s entry into digital media would be a game-changing development and mount the first serious challenge to the market dominance of Apple’s iTunes store. However, industry watchers were very skeptical, citing that the prices for downloadable movies were essentially the same as physical DVDs. Although Wal-Mart still operates a Windows-only online music store—which recently began selling DRM-free songs in MP3 format—the company has yet to chalk up any significant success in digital businesses. Last year Walmart was forced to unplug its effort to compete with MySpace (dubbed "The Hub") amid accusations the company was self-seeding the site with promotional messages about the service and Wal-Mart itself, and the company even had to shutter a rent-by-mail DVD business, turing its handful of customers over to Netflix.