Wal-Mart launches video download service

LOS ANGELES (Hollywood Reporter) - Wal-Mart Stores Inc., already the nation's top seller of DVDs, said Tuesday that it has become the first major retailer to offer a digital download service that will feature movies from all the major studios.

The product, in beta, allows consumers to choose from more than 3,000 movie and television titles and download them to personal computers usually at a cost less than that of iTunes, the Apple Inc. online store that began selling video downloads more than a year ago.

The business of delivering popular video content on-demand over the Internet is a small but growing one, and becoming increasingly competitive and complicated, with such players as Netflix, CinemaNow and Movielink offering titles with differing rules attached, some for rent and some for sale.

The business got even more competitive Tuesday when Amazon.com said its service, Unbox, has teamed with TiVo Inc. so that downloaded movies can be viewed on TV screens.

According to PricewaterhouseCoopers, the Internet video download business is expected to be worth $3.7 billion in annual revenue in 2010, when DVD rentals and sales as a business will amount to about $29.5 billion.

While Amazon.com launched Unbox without movies from the Walt Disney Co., and iTunes offers only movies from Disney and Paramount, Wal-Mart boasts Disney and Pixar, Paramount, 20th Century Fox, Sony, Universal, Warner Bros. Pictures, Lionsgate and MGM, as well as TV shows from Fox, Fox Reality, 20th Century Fox Television Classics, Comedy Central, VH1, MTV, Nickelodeon, the CW, Warner Bros. and more. Wal-Mart initially will not offer shows from ABC, CBS or NBC.

The company is selling TV episodes for $1.96 and movies, depending on how new they are, at price points ranging from $7.50 to $19.88.

Wal-Mart also said it will bundle some titles, allowing consumers to buy the "Superman Returns" DVD and the digital download for a "small additional price."

According to estimates, Wal-Mart sells about 40 percent of all DVDs in the country. The company reportedly objected when iTunes began selling movie downloads, worried it might cut into its own DVD business.

Disney CEO Robert Iger disputed such reports, and Wal-Mart said Tuesday that many of its movie downloads will be made available the same day the DVD is released. Oscar-nominated "The Departed" and "Babel" will be ready for download February 13 and February 20, respectively.

"With thousands of movie and TV titles now available for download, coupled with the strength of our successful physical DVD business, this is an unprecedented offering of video content, features and capabilities currently unmatched in the market," said Kevin Swint, Wal-Mart divisional merchandise manager for digital media.

Reuters/Hollywood Reporter