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Apple in Talks with Wal-Mart over Movies
Alex, Variety.com writes "If you can't beat 'em ... Apple and Wal-Mart are in discussions over an alliance that could allow the giant retailer to profit from iTunes video downloads. Apple would then gain access to titles from every major studio." From the article: "A deal could take the form of a digital download 'coupon' that would allow consumers to buy movies, TV shows or music on iTunes with Apple paying the retail giant a percentage of the proceeds, one industry insider said ... Hollywood has been closely watching Disney's relationship with Wal-Mart in the wake of the deal. When Wal-Mart caught wind of talks between the studios and Apple, it threatened to cut its order of 'High School Musical' over the summer. Disney CEO Bob Iger did the deal with Jobs anyway, and the rest of Hollywood has been watching to see if and when the other shoe drops."
But if it does, it would be nice to be able to download a movie then pick it up in the store at a later time for only slightly more than the cost of the DVD. Instead of spending $10 for the download and another $20 for the dvd you could spend something like $22 for both in a "package"
I'm certainly not a Marketing Genius, but it seems to me that if the iTunes store really did sell $1,000,000 worth of movies in the first week, then maybe other studios will realize that pissing off Wal-Mart isn't such a big deal after all.
If I were in Apple's place, I think I'd wait a while before giving in to any major retailer. On the other hand, I don't know how gift cards sold at retailers work -- if everyone else who sells an iTunes gift card gets some cut off the top of the cost of the card, then I don't see any issue letting Wal-Mart play in that game, too (which, according to the article, they don't at present).
Didn't a lot of studios initially balk at the idea of TV over iTunes, fearing it'd hurt DVD sales? Somehow I think that movies would go the same way, with initial reluctance, phenomenal sales of the initial Disney titles, growing acceptance, and finally becoming just another standard sales channel.
Those deals are only for the BIG suppliers with SHORT turn-around deals. Wal-mart is a vicious customer, but can deliver HUGE volumes. They have also moderated themselves, as suppliers stopped working with them when they got too cutt-throat. The buyers have been reigned in, because big accounts like Rubbermaid became problematic. A friend in marketing at Rubbermaid was telling us that while the "buy on sale," where Walmart accepts the inventory at their cash register has pushed the inventory holding risk to the suppliers, it's only on products that are sold within 2-3 days of being in the store. Wal-mart doesn't waste shelf space on items that don't turn-over.
The suppliers are actually happy with the arrangement, because it's a deal point, and they can extract better pricing by working with that system. While I'm sure that Wal-mart has played hardball as you described, it's a little overstating to suggest that that is the normal way of doing business.
My friend also suggested that the buyers have been becoming less adversarial, and trying to produce more win-wins. Sure the Wal-mart culture is there... normally buyers get taken out to lunch with salesmen who entertain them... a bit of sneaky corruption, the buyers are pushed to gives a little bit of the company's money to get well treated by the salesmen. At Wal-mart, salesmen go to Wal-mart HQ, no meals are allowed. All negotiations take place in a small room at Wal-mart HQ. By keeping their buyers from trading favors with salesmen, they keep their costs down.
Walmart does MANY things... they are aggressive, but not necessary under-handed. However, they have a LOT of maneuvering room in the industry, and if they can make real money by selling Apple iTunes movies in the store, they WILL bring market pressure on the studios to play ball.
Alex