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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."
that's what Apple would be doing... Grow some balls Steve...
Apple would then gain access to titles from every major studio.
This is a huge jump in logic. It's assuming that the reason why Apple doesn't have access to these titles now is strictly because Wal-Mart is competing with iTunes. The fact remains Apple will still have to hack out distribution deals often on a per-title basis, and many of the studios don't want to offer most of their movies for download at all. It's got nothing to do with Wal-Mart.
All this deal would do is remove one of the smaller obstacles Apple faces in getting more films on iTunes (and my bet is Wal-Mart is probably the least of Apple's headaches). The big obstacles - copyright, DRM, distribution rights, contracts between various parties, etc. - would still remain.
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 not sure I see why this is a "If you can't beat 'em - Join 'em" deal. Was Apple trying to beat Wal-Mart?
Seems to me that they're just looking to a different channel to market their product since the first channel wasn't interested.
So, does this mean I'm entitled to part of the profits all my competitors make, on basis that they're taking money I could have made had they not had a more sucessful and up-to-date business model?
Note to self: sue everyone!
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Wal-Mart's aleged threat to cut Disney orders if Disney started selling through iTunes would, in an honest administration, be an instant anti-trust lawsuit by the Department of Justice.
Its perfectly legal and valid for Wal-Mart to squeeze its suppliers when they sell to Wal-Mart, but to threaten suppliers because they are selling through other venues, when Wal-Mart has an unquestioned monopoly in many areas, would be asking for intervention.
However, with the current DoJ completely toothless, and prefering Seattlements (eg, the Microsoft anti-trust resolution) to actually going after entrenched business interests (especially hard-core republican supporters like the Waltons), Wal-Mart doesn't need to worry.
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It's a wonderful thing for Wal-Mart and I don't really fault them for doing it, but this is basically extortion on a grand scale. A new delivery model threatens the very thing that gives Wal-Mart its advantage (their distribution system), and instead of competing straight-up, they threaten their suppliers to the point that the new distribution model has to throw them some money to STFU. So the new distribution model has a chance to compete on a level playing field (being able to offer the same products.) Again, well-played by Wally World, but just sickening.
After all he's in deep up to his iBalls with this one.
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.
Got a lot of friends who've been working for Wal-Mart for years and have been getting the shaft the whole time. Wal-Mart does not care about its employees or suppliers. I work in the health-care industry, particularaly with insurance providers. Wal-Mart contracts through Blue Cross of Illinois for benefits of their 'full-time' work force. (Meaning 40 hours a week, but they won't pay you overtime if you work 60 one week and 20 the next). You want a bad benifit package, ask a Wal-Mart employee. The government offers far better insurance for people below the poverty line and for much cheaper. And your average full-time (non-manager) Wal-Mart employee is at poverty-level income.
This sig isn't original enough, it's time to come up with something witty...
Just as the good old cringley said at September 14:
The success of Apple's movie download business right now depends mainly on not alienating Wal-Mart.
So for the moment Apple tells Wal-Mart that movies sold through the iTunes Store won't be a threat because of their lower than DVD
resolution. When that fails, Apple will point out that HD-DVD and Blu-ray are coming and Wal-Mart should stop worrying. But
eventually Apple will succumb to its need to sell yet more iPods and will point out that its little gizmo is a fine substitute
for an optical disc. Take your iPod to Target and fill it with movies. Or, better still, buy an iPod at Target and THEN fill it
with movies. Remember that in the end this is all about selling more razors, not more blades, so movie sales don't really matter much to Apple as long as iPods are flying off the shelves.
First of all, just let me buy something online via a download without any digital coupons or anything like that. A novel concept would be that I would go to a website, pick a movie and download it. It's pretty complicated, granted, but I think it could be implemented. But that's neither here nor there...
Secondly, and completely unrelatedly, from TFA:
If they're taking a loss at $13 per DVD what's the real cost? If Wal-Mart buys 300,000 copies of something, do you mean to tell me they're paying more than $12.99 per movie?! I thought they were these great negotiators, cutthroat distributer killers. Or does that only work on toilet paper and tools made in China?
Please don't use "umm" or "err" or "erm".
Apple's Wins:
...
1. Walmart sells a boatload of iPods. Apple probably wants to keep Microsoft out of the game... Given Walmart's purchasing power, Steve will insist on two things: a)squeeze Microsoft on cost margins further exacerbating Zune's losses b)iPod gets premium shelf spacing other players including Samsung and Microsoft get stored in the back c)iPod accessories get better placement (taking it further perhaps extending Apple's store within a store concept from CompUSA to Walmart d)leverage for margin negotiations over iPod sales
2. Fairplay.... Walmart does not take backstabbing lightly. Microsoft's strategy to drop PFS (remember Walmarts 88cent store is based on PFS) support and create a new DRM standard reeks of screwing their partners. Sure Microsoft thinks they can get away with it because they are a Monopoly. But Walmart is a monopsony.... when a monopoly meets a monopsony its like Godzilla meets Mothra..... Walmart is going to put its weight behind Fairplay... this will create quite a bit of momentum for Apple
3. Apple gets to have major studios onboard with Walmart's support
I'm having trouble seeing why Wal-Mart has such a big deal with this, other than they can be dicks about it and get away with it.
It's my experience that the people who would be buying movies online are not necessarily the same people who regularly shop at Wal-Mart. There are overlaps, definitely, but on the whole the two markets don't overlap. And maybe that's just my own standard biased view point, but this just seems like a classic bully situation. Wal-Mart needs to be put down.
No sig for you. YOU GET NO SIG!
Apple specializes in selling low quantities of very expensive items. Wal-Mart specializes in selling high quantities of very cheap items.
Congratulations, this is why it could work out. You now have the spectrum of people who buy cheap (walmart) and people who pay the Apple Tax (apple). You have two different segments of the market that neither one can hack due to stereotypes. And when you combine their powers...
For a lot of these people, its wal-mart or nothing. (does wal-mart employ illegals from south of the border like some people do?)
I am sure that if these people could get jobs elsewhere (k-mart, target or any other place) they would. But they cant.
An international retail store chain. There are MANY of that kind.
The Internet, is BIGGER than not only wal-mart, but ALL retail store chains combined.
Wal-Mart, YOU have to adapt to the modern times. Modern times will not adapt to your ways.
Read radical news here
I dunno if this is such a good idea. We're talking a huge collision in image between Apple and Wal-Mart. Apple's image is hip, liberal, urban. Wal-Mart's is working-class, conservative, and rural.
Job's balls have nothing to do with this issue. Wal-Mart sells 40% of the DVD's from Hollywood. The comapny has threatened the movie studios and so far they are not willing to work with Apple. The new move by Wal-Mart shows that they are an extortion racket. They are also the bigger player. Apple does not have the upper hand. And you should also consider that Wal-Mart can launch its own service. They do not need Apple.
Why not (in addition to coupons and such) have ipod movie kiosks in between the DVD racks? I mean, the real advantage in going to a brick and mortar store is instant gratification. Some people have iPods and dial-up (primarilly ripping music from CDs and not fussing with video) or slower broadband (a full movie can take a while to download). I can see the benefits of a store like Wal-Mart having a library of titles locally cached that can be rapidly transferred to the customer's iPod . . .
Apple is blocked from selling movies from major studios (minus Disney because Steve owns shares). Wal-Mart sells 40% of the movie industry's DVDs. When they shook the table, the industry sat on their hands. A deal between Apple and Wal-Mart is a deal BETWEEN devils. Believe me, if Apple had the leverage that Wal-Mart did, they would employ the same tactics. Look at DRM and the .99 cent song.
If people don't like it they should continue to rent DVDs or buy them. This parnership marks a new way of doing business. Now that Apple can sell the movies online, the door is open to other online suppliers like AT&T, Comcast and Amazon.com. Microsoft will shuffle in the door late as usual.
Will the movies be the "Wal-Mart Censored" version?
A friend bought a copy of "Fast Times at Ridgemont High" at Wal-Mart.
Everything about the abortion was missing from the film.
I've heard other stories about movies from Wal-Mart as well.
Church may not directly do so, but indirectly, they sell fancy clothes. Church is a veritable fashion show I tells ya.
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WHO ATE MY BREAKFAST PANTS?
But see, your explanation just goes to show that Wal-Mart has no need to offer their employees more. Apparently, they're functioning just fine by using employment of apathetic or depressed people -- groups who don't seem to be good enough workers for anyone else to hire.
When you look at it that way, it seems like a bad idea to complain that they should pay their workers more! Why reward apathy? People always have "other choices", really. They just don't have other choices they're willing to put forth the effort to take advantage of. (And hey - that's human nature. I know *I* could do better for myself, financially, if I was willing to make some sacrifices I don't choose to make. But that's my own personal "comfort zone". And it sounds like for some of these Wal-Mart workers, theirs is having a steady paycheck and a job at "poverty level income", vs. having to learn new skills or deal with personal problems they may have.)
FTA:: "Customers who throw a disc in their shopping carts spend an average of $75 per trip to the store -- far more than those who don't pick up a DVD."
Walmart's air supply is DVD's, period.
FTA:: "Studios are trying to calculate how much longer DVD sales -- 40% of which go through Wal-Mart -- will be a cornerstone of their business."
Walmart is sucking thin air unless they replace sales lost to Digital downloads.
FTA:: "Studio sources say the rest of the majors (Hollywood studios) are very close to joining Disney in a deal with Apple but are holding off until the end of the key fourth quarter (Xmas), when half of all DVD sales occur."
Walmart is out of air after Xmas.
Walmart is the next Luddite if they don't transition with their customer's, Hollywood and popular culture going over to Digital.
In play are Walmart customer's, who's going to win their Entertainment dollar$ and live off the follow-on patronage represented by that $75.00 shopping basket. I would venture that Amazon is looking pretty good to Walmart right about now. A Bricks&Clicks deal would put Walmart's distribution behind every Amazon click to bring real leverage to the marketplace.
And you've hit the nail on the head. And I believe it explains part of the undeniable sense of depair I feel whenever I have to walk into a Wal-Mart. Especially the 'ghetto' Wal-Marts that have fallen into K-Mart levels of disrepair.
This sig isn't original enough, it's time to come up with something witty...
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