Wal-Mart launches movie, TV download service

NEW YORK/LOS ANGELES (Reuters) - Wal-Mart Stores Inc. (WMT.N) on Tuesday introduced a test version of its new video download service, making it the first major retailer to offer such a service with the backing of all of Hollywood's big studios.

The service, available on Wal-Mart's Web site, lets users download movies or television episodes that they can watch on their computers or portable media players, and pits the No. 1 retailer against other downloading sites, including Apple Inc.'s iTunes.

Wal-Mart said the service includes more than 3,000 titles from movie studios like 20th Century Fox (NWS.N), Disney (DIS.N), Lions Gate (LGF.N), MGM, MTV Networks (VIA.N), Paramount Pictures, Sony Pictures Entertainment, Universal Studios Home Entertainment (VIV.PA) and Warner Bros. (TWX.N), and television networks including Comedy Central, Fox, and Nickelodeon.

The Wal-Mart site is being launched with more titles than any other download service started, and the downloads are being priced from $1.96 for episodes of television shows to up to $19.88 for new movies.

"We've been working on this for almost a year now," said Kevin Swint, Wal-Mart's divisional merchandise manager for digital media. "It's been a lengthy process."

In launching its new service, Wal-Mart is entering a crowded market where it has no guarantee of success.

Amazon.com's Unbox already lets users download movies and TV shows from six Hollywood studios, while Apple's iTunes store offers TV shows and full-length films for download.

Since Wal-Mart accounts for about 40 percent of U.S. DVD sales each year, James McQuivey, principal analyst for Forrester Research said Wal-Mart is able to say to the studios: "We are going to do this and you are going to do it with us."

But he said the download market is still "very small" and "There are enough barriers in place that we don't see this being a big phenomenon by the end of the decade."

GOING DIGITAL

Hollywood movie studios have supplied content for several years to movie download services such as CinemaNow and Movielink, although the services have not achieved widespread adoption.

Retailers have been wary of the trend, worried that the downloads might crimp their DVD sales.