Wal-Mart Launches Video Download Service

Mega-retailer Wal-Mart has officially thrown its hefty retailing power into the video download business, launching a test version of its video downloading service. Unlike many Wal-Mart offerings, the pricing on Wal-Mart’s service isn’t significantly lower than other (legal) options out there, but Wal-Mart does have one thing going for it that no one else can boast (especially Apple’s iTunes service): it has all six major Hollywood studios on board and ready to roll.

Although Wal-Mart has been toying with the idea of a video download service for some time (remember this? and this?) the scope of Wal-Mart’s new service may be big enough for some bandwidth-enabled consumers to take notice. Movies from Warner Bros., Sony, Paramount, Twentieth Century Fox, Universal, and Disney will all be available on the service—with new releases appearing on the same day as their DVD release. In addition, Wal-Mart will be offering downloadable versions of television episodes from Fox and Viacom properties MTV, Nickelodeon, VH1, CW, and Comedy Central—although the big three broadcast networks aren’t yet on board, two of their parent companies are already in the mix.

The pricing for Wal-Mart’s movie service isn’t going to be a bargain: the company is letting studios structure downloadable pricing the same way they structure the prices of standard DVD titles. New releases will be priced around $20; classic library title will go for $7.50 to $10, while most other titles will be somewhere in between. One of the reasons Apple has had difficulty lining up studio partners for its iTunes movie download service (currently hosting Disney and some test titles from Paramount) is that Apple insisted $9.99 was going to be the price for movies; Apple then caved to Disney, introducing tiered pricing up to $14.99 for new releases. Studios weren’t happy with those price points, and Wal-Mart plainly ceased the opportunity to let studios go with their existing pricing schemes: doing so not only keeps the studios happy, but prevents download sales from cannibalizing sales of physical DVDs. And it doesn’t hurt that Wal-Mart is the number one seller of physical DVDs: they don’t want to see that business dry up any more than the studios do.

Wal-Mart’s service is powered by technology from HP, and relies on Microsoft’s Windows Media DRM to protect downloadable content. Users will not be allowed to burn standard DVDs of movies they purchase from Wal-Mart’s service; for now, movies will be offered in standard definition, although Wal-Mart is offering some titles in a “portable format” intended for small-screen viewing.

The success of Wal-Mart’s movie service will, of course, depend on sales. Services like Movielink and CinemaNow have failed to take off despite having offered video downloads for some time; meanwhile, even with limited title selection, Apple is selling millions of copies of Disney films through iTunes. It’s not clear that a real market exists for rights-restricted downloadable versions of movies which carry the same price tag as a standard DVD.

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