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Wal-Mart Closes Online Movie Download Service

Posted by Zonk on from the hard-to-fight-the-flix dept.

eldavojohn writes "A year after opening its movie download service, Wal-Mart has abandoned the endeavor. They claim this is a result of HP's decision to stop supporting its video download store software. The article also notes that, unlike iTunes, Wal-Mart offered variable pricing which attracted a lot of studios. 'The world's largest retailer instead turned its rental service over to Netflix Inc. Wal-Mart still operates a music download service and continues to sell CDs and DVDs at retail stores and over the Internet for shipping by mail.' Is this evidence of the strength of unified pricing in media downloads or just another company being squished by the giant Netflix & Apple?"

40 of 136 comments (clear)

  1. Wal-Mart "squished"? by Anonymous Coward · · Score: 4, Funny

    Wal-Mart "squished"? I'd like to see that honestly.

    1. Re:Wal-Mart "squished"? by ByOhTek · · Score: 2, Insightful
      You beat me to it.

      I was gonna say.

      [...] or just another company being squished by the giant Netflix & Apple?


      You mean for once WalMart isn't the one doing the squishing? How'd that happen?
      --
      Self proclaimed typo king, and inventor of the bear destroying coffee table (patent not pending).
    2. Re:Wal-Mart "squished"? by CRCulver · · Score: 2, Interesting

      While Wal-Mart has completely taken over small-town America, it is actively resisted by urban residents, and the company has been beaten back from establishing footholds on the outskirts of many city centers. See Fishman's The Wal-Mart Effect for more on this division between success in some areas and defeats in others. City dwellers (therefore a fairly large amount of Americans), have shown that Wal-Mart's offerings aren't too appealing, and the company has had no luck finding a way into their hearts.

    3. Re:Wal-Mart "squished"? by flaming+error · · Score: 2, Funny

      You could also try the book here, too.

      It's hard to be all things to all people.

    4. Re:Wal-Mart "squished"? by eln · · Score: 2, Insightful

      I think you're misjudging city dwellers. In my experience, whether or not Wal-Mart is really challenged depends almost entirely on whether or not there's an aggressive neighborhood association in the area where they want to build. In cities where Wal-Marts are present, they are generally always crowded, and presumably make good money.

      Here in Austin, which is admittedly not a huge metropolis but is a good sized city, there are already several Wal-Mart stores, and I guarantee none of them are hurting for customers. However, there is a neighborhood association in north Austin that has been trying to block a Wal-Mart from being built near them for close to two years now. What's odd about that effort is that the area Wal-Mart wants to build in is currently occupied by a dilapidated mall that is mostly empty and rarely sees much traffic. They claim that having a Wal-Mart there would drive down property values (although I have seen plenty of very upscale neighborhoods located right next to Wal-Marts) more than having a mostly empty run-down mall does now. Personally, I think if another discount store that wasn't called Wal-Mart wanted to build there, no one would have any issue with it.

      Personally, I rarely shop at Wal-Mart mostly because it's always too crowded and the marginal savings on decent stuff (the really cheap stuff is almost universally garbage) isn't worth the hassle. However, I doubt Wal-Mart spends a lot of time worrying about how to make their stores less crowded for my benefit.

    5. Re:Wal-Mart "squished"? by 0100010001010011 · · Score: 2, Interesting

      I think the GP isn't talking about suburbs but the actual city. We're talking full blown cities. I have friends who live in and around Chicago. They walk or take public transportation everywhere. Their local deli, the local grocery store. Have maybe 15 parking spots total. Walmart doesn't fit into this 'life style' You don't have 5 acres to put a 800 spot parking lot and a huge store. City dwellers are happy not having to drive anywhere.

      In the suburbs, you have a huge sub division with cookie cutter houses and 2.5 children per house. No public transportation nothing. If you have to drive somewhere, you're probably going to want to drive one place rather than 100. This is where walmart is thriving. As population density drops it makes more sense.

      And yes, Chicago hates "Big box stores" because they're not union. Target, Meijer, Walmart, etc. They're all non-union and I don't think a single one is within City limits (there wasn't last time I checked).

    6. Re:Wal-Mart "squished"? by MBraynard · · Score: 3, Interesting
      Walmart doesn't fit into this 'life style'

      If that were true, then the city wouldn't have needed to pass laws to make it impossible for WM to open up.

      Chicago is surrounded by 42 Wall-Marts and the city-dwellers are exceptionally eager for WM jobs and services. Witness this from George Will's column on the issue:

      This suburb, contiguous with Chicago's western edge, is 88 percent white. A large majority of the customers of the Wal-Mart that sits here, less than a block outside Chicago, are from the city, and more than 90 percent of the store's customers are African American.

      You can read the full column here.

      Every political criticism of WM - everyone of them that I have ever heard - is a lie.

    7. Re:Wal-Mart "squished"? by Divebus · · Score: 3, Insightful

      Wal-Mart got squished by doing what the studios wanted, not what the consumers wanted.

      --

      Most of the stuff on /. won't survive first contact with facts.
  2. Cost and lack of extras the reason. by Jason+Levine · · Score: 5, Insightful

    I never used the service myself, but apparently, the movies cost $20 each. For that price you could back up to DVD three times, but not to a format that played in a DVD player. Also, you didn't get the extras that typically come on a DVD. So you paid more money, for less content, that could be used in less places. And they wonder why it wasn't successful?

    --
    My sci-fi novel, Ghost Thief, is now available from Amazon.com.
    1. Re:Cost and lack of extras the reason. by BrianRoach · · Score: 2, Insightful

      Exactly.

      Compound that with the fact that there is probably a Walmart (or some other large dicount retailer) within 5 miles of your home in most major areas.

      If I can get in my car, drive to the actual Walmart, buy the superior product for the same or often less than the one online, and be back at home in under 20 minutes ... erm, why would I buy the DRM restricted POS online?

      - Roach

    2. Re:Cost and lack of extras the reason. by Facetious · · Score: 4, Funny

      I simply don't have much free time... ...says the guy posting to /. (Sorry, I couldn't resist.)
      --
      Let us not become the evil that we deplore.
    3. Re:Cost and lack of extras the reason. by BrianRoach · · Score: 2, Interesting

      Honestly for me, irrespective of salary, a 20 minute savings would be worth at least $20 because I simply don't have much free time.

      I guess I should feel lucky to have a job that lets me go to the grocery store. Where they sell DVDs. Often for less than $20.

      Sorry, but the "I make $X per minute" thing is just silly in almost every case. You don't work 24/7. You are not getting paid for your non-work time. My wife does not pay me $40/hr to take out the garbage, does yours?

      And anyway ... if you have no free time, then you don't have time to watch movies anyway. Problem solved.

      (On a serious note, if you literally have a schedule so full that taking 5 minutes to buy a DVD is an issue ... you might want to re-think whatever it is that you're doing. It can't be healthy.)

      - Roach

  3. Squished? by cheebie · · Score: 4, Insightful

    Do they actually think Netflix squished something run by Walmart?

    That's like saying the local burger joint is going to crush McDonalds! Sure, Netflix is a big company, but they're nothing compared to the Wally-world behemoth.

    1. Re:Squished? by timster · · Score: 4, Insightful

      Sure they did. In this case, it wasn't even hard.

      Sometimes a big company will try some new endeavor to much fanfare, but not bother to try very hard, assuming somehow that they will win because they are big. When that happens it's easy to take them out. Wal-Mart had no plan here; they just thought selling some videos at terms dictated by the studios might get them some cash. If they ran their retail stores that way, those would fail too, but they put serious effort into their retail stores.

      --
      I have seen the future, and it is inconvenient.
    2. Re:Squished? by 0100010001010011 · · Score: 4, Interesting

      "Walmart is large, but it is horribly inefficient"

      I hate my local Walmart as much as the next guy. And individual stores may be inefficient or suck. But the corporation as a whole is extremely efficient. I work in the trucking industry. Walmart is one of the companies that can afford to spend $1000 on an experimental MPG increaser. Whether it be APUs for the trucks, side skirts for the trailers, single tire rears, etc. If engine company X can provide .1 MPG extra per year on average, that's in the hundreds of thousands of dollars for Walmart.

      They forced use of APUs on ALL trucks after doing a trial run. At a trucking conference they presented their savings broke even at 16 months. Now a ton of other companies are following their lead.

      I thought I read on /. that they're going to RFID. As soon as Walmart forces RFID, maybe we'll see it everywhere. UPC is nice but old.

      I don't have a lot of nice things to say about walmart, but that they're inefficient isn't one of them.

    3. Re:Squished? by markrages · · Score: 2, Funny

      How does Apu increase mileage?

    4. Re:Squished? by mabhatter654 · · Score: 2, Interesting

      I think it was "me-too" to copy Apple with iTunes... One of the things NBC cited was Walmart holding their DVD distribution channel "hostage" if the studios didn't do something about Apple raining on their in store sales parade of music and DVD sales. Walmart's business is selling commodity stuff, cheap. DVDs fit the bill perfectly as there is no variation (Spiderman 3 is the same anywhere) and Walmart has a better channel than a zillion little stores to control for the studios. Everybody wants to be part of Walmart's success.. big media, Microsoft, etc... it lets them get whatever they want to try out.

    5. Re:Squished? by 0100010001010011 · · Score: 2, Informative

      Yes. Auxillary Power Units.

      Depending on how vertically integrated the Chassis OEM is, it may be more than a generator. Sometimes the coolant is used as the heating fluid in the cab. Yes they are just generators mostly, but that's what the industry decided to call them. Because the 15L engine is the "Main Power Unit" this is the "Auxilary Power Unit"

      California for 2009 has enacted STRICT Anti-Idling laws. Any more than 15 minutes idling and not in traffic, the engine must shut down. (Written into the engine software so the driver can't try to bypass it).

      Back when fuel was cheap, 0.2 gallon per hour or what ever to idle was nothing. So no one cared. Drivers didn't care because the company was paying for the fuel. Now 1 or 2 gallons saved a day per 1000 trucks is big money.

  4. Wal-mart does what it does by beckerist · · Score: 4, Insightful

    Wal-mart is successful because it has a very efficient method of physical distribution. This has no baring on their success in digital distribution.

    1. Re:Wal-mart does what it does by Original+Replica · · Score: 2, Interesting

      Don't forget the other key to Wal-mart success, all-in-one convenience vs. smaller retailers. For someone with kids in tow, being able to buy groceries and shoes and school supplies all in one place is going to be much easier. Another factor that has no baring on digital distribution. A harder to measure influence would be stigma. Wal-mart is anti-glamorous, Netflicks and iTunes are moderately cool.

      --
      We are all just people.
    2. Re:Wal-mart does what it does by moderatorrater · · Score: 3, Insightful

      Let's not forget that Wal Mart was the first to really push a large number of stores in medium-sized cities. My hometown (~10,000 people) has three other comparably sized cities within a 5 minute drive and then one much larger city within a 15 minute drive. All of the other chains were opening stores in the large city 15 minutes away when Wal-Mart opened one in my hometown and one in the larger city. Effectively, this made it so that one Sears had to compete with two Wal-Marts but, since each Wal-Mart targeted a smaller area, only one of the Wal-Marts competed with the Sears.

      I read somewhere that 75% of all KMarts and Sears competed with a Wal-Mart, but only 33% of Wal-Marts competed with a Sears because of this strategy. When you can beat your competitors on price, location, and convenience, you're going to do well no matter what.

    3. Re:Wal-mart does what it does by LanMan04 · · Score: 3, Funny

      Your sig makes me want to kill you. :)

      --
      With the first link, the chain is forged.
  5. It's Walmart by techpawn · · Score: 3, Insightful

    When the download becomes the same cost as buying/shipping physical media I think most Wal*Marx shoppers would rather have the physical media. Knowing a lot of people who WILLFULLY shop at their "super centers" and also Not so willfully work there, they are generally not the most technically inclined.

    HP Dropping support sounds like a cop out... but a believable one

    --
    Ask not what you can do for your country. Ask what your country did to you
  6. Businesses are NOT swiss army knives by mcsqueak · · Score: 3, Interesting

    Is this evidence of the strength of unified pricing in media downloads or just another company being squished by the giant Netflix & Apple?"

    I think this is evidence of businesses trying to be too many things to too many people and slowly discovering that no, you can't be everything to everyone. "Jack of all trades, master of none" indeed.

    Focus on a specific market and DO THAT WELL.

    1. Re:Businesses are NOT swiss army knives by stewbacca · · Score: 2, Interesting

      Exactly what I wanted to say, but you beat me to it. Wal-mart can only half-ass so many products before it finally catches up to them. This holds especially true with technical deals like this one (anyone can sell cheap Haynes underwear, but not everyone can sell digital content). You can't just throw money at something you have no expertise with and hope it makes money for you. You actually have to get involved and understand the technology that you are counting on to make you some money.

    2. Re:Businesses are NOT swiss army knives by moderatorrater · · Score: 2, Insightful

      anyone can sell cheap Haynes underwear, but not everyone can sell digital content That's only true if you assume that you can get cheap Haynes underwear in the first place. The reverse is true (at least for my skill set) when you consider how easy it is to set up a website compared to how hard it is to get the physical store, negotiate price with the supplier, buy from the supplier, distribute to the individual locations and manage the employees that are required to sell those products. Wal-Mart is exceptionally skilled at all those things and their size has made them even more so.

      Unfortunately, the only thing that they can leverage from their retail success is their name recognition. Those things that make me love Wal-Mart evaporate in the digital world: their lenient return policies, multiple locations and low prices are all nullified by the fact that it's not a physical medium.
  7. Nonono you got that wrong by Anonymous Coward · · Score: 2, Funny

    You have to at least pretend to be on-topic.

    Like this:

    WALMART ONLINE MOVIES SUX0RZ

    or if you liked the service

    WALMART ONLINE MOVIES SHUTDOWN SUX0RS

    See, that wasn't so hard, was it?

  8. Outside the Core Competency by RobBebop · · Score: 3, Insightful

    While hindsight is 20/20... this is a classic example of an "Old media" company failing to adapt to the "New Media" because they didn't have any expertise in the current technology.

    Wal-Mart's core competency is managing their supply chain. They make money by being the most efficient supplier of products that are in local demand. They operate their integrated technological systems marvelously. They don't know jack-shit about the internet and "download-able content". They should partner with Amazon to run their webpage... though that would probably start to enter into an anti-trust area.

    --
    Support the 30 Hour Work Week!!!
  9. Too many restrictions... by log1385 · · Score: 2, Insightful
    Wal-Mart put some annoying restrictions on their movies. Here's a quote from their FAQ:

    Due to licensing restrictions, you cannot copy or transfer your video files and play them on a different computer. What if I want to watch movies on my laptop and my desktop? What if I decide to buy a new computer and can't watch my movies anymore? Wal-Mart should realize that people can just download a movie via P2P and not have to deal with any restrictions like this. I for one and much more willing to pay money for media if I can do whatever I want with it.
    --
    Seek and ye shall find.
  10. All of Wal-Mart's eggs were in HP's basket by Sloppy · · Score: 3, Insightful

    Is this evidence of the strength of unified pricing in media downloads or just another company being squished by the giant Netflix & Apple?
    If you believe Wal-Mart's explanation, it sounds like this is caused by relying on single source software maintenance. Hey, software users: GPL is for you. It's not a hacker thing.
    --
    As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
  11. No contract with HP? by NonSequor · · Score: 3, Insightful

    Why didn't Walmart, of all companies, get a contract that insured that HP couldn't bail on them?

    --
    My only political goal is to see to it that no political party achieves its goals.
  12. My name is Inigo Montoya, you killed my software.. by Gavin+Scott · · Score: 2, Interesting

    In a statement, Wal-Mart spokeswoman Amy Collella said the company closed the store after Hewlett-Packard Co., which provided the software running the site, ''made a business decision to discontinue its video download-only merchant store service.''

    Walmart fell victim to one of the classic blunders! The most famous is never get involved in a land war in Asia, but only slightly less well-known is this: never buy any kind of application software from Hewlett-Packard! Ha ha ha ha ha ha ha! Ha ha ha ha ha ha ha! Ha ha ha...

    Seriously, HP has the worst cace of attention deficit disorder of any company I've ever seen. I've spent 25 years watching them announce "the next big thing" only to completely forget about it a year later after having sold it to three big customers (who are then completely screwed of course). Anyone who buys a proprietary solution from them at this point deserves what they get.

    G.
  13. DRM is what kills it for me. by headkase · · Score: 3, Insightful

    I refuse to download anything that has DRM on it. Especially considering that right *now* I buy my DVD's through retail channels and rip them myself (my country doesn't have DMCA idiocy preventing that) to the format of my choice. And when I switch around operating systems I don't fall into the trap of "sorry you're unsupported". Buying retail and ripping myself is what suits me best right now. Maybe when online retailers realize that DRM actually does nothing to stop piracy and only pisses off the people who actually do buy the product they'll drop it. And when/if they do drop DRM then I'll buy online instead of retail.

    --
    Shh.
  14. Sales force by abes · · Score: 2, Interesting

    Someone else pointed out that part of the issue is that Walmart sells DVDs already, and thus they were competing with themselves. I suspect they started the digital distribution because they realized long-term DVDs are dead. Even if a winner is ever found for Blu-Ray or HD-DVD, it might be too late now. Not that people won't buy them, but for most movies digital distribution seems likely to become the preferred method.

    However, short-term, DVD is still king. So do they cut into their current sales for an uncertain future (can they really win against the other big-players? .. it's certainly out of their area of expertise), or do they go ahead with their current sales with the knowledge that they'll lose out later on? One thing to consider, their primary market is not exactly tech-savvy, and therefore will likely continue with DVDs for the next 10-15 years.

    Another possible explanation, is perhaps they realized getting into variable-pricing was a mistake. If history gives us any lessons, the media companies are greedy bastards. They don't seem to give much thought into long-term planning. This is one case where the intelligence of Apple really comes through. They realized that unless they could control the prices, companies would try to charge more money than the physical media costs. I suspect after some grace period, in order to save face, NBC will come back to iTunes.

  15. letting the studios set the variable pricing.... by pxuongl · · Score: 2, Insightful

    Wal-Mart initially offered films from $12.88 to $19.88 and individual TV episodes for $1.96 -- 4 cents less than the iTunes store. Wal-Mart's online store sold older titles starting at $7.50, compared with the $9.99 charged by iTunes.

    Many studios have resisted signing deals with iTunes in part because of Apple's desire to sell movies at one price. Studios prefer variable pricing such as Wal-Mart offered.

    what's to note here is that films were offered between $13 and $20 a pop, with older titles at $7.50. When will it occur to studios, in regards to how variable pricing won't work, that if there is no demand for an "older title," then there will be no purchases, even if you sold them at a buck a pop.

    the ones that are in demand, that people want to buy, are being sold at or above the price of a regular dvd! sounds more like the studios are trying to make a download service fail.

  16. New slogan. by palegray.net · · Score: 2, Funny

    Wal-Mart: We Sell Out For Less!

    --
    512 MB RAM, 20 GB disk, 200 GB transfer, five datacenters. $19.95/month.
  17. Probably had code escrow but... by SuperKendall · · Score: 3, Interesting

    You can't have a contract that compels another company to do something forever, that's just not practical.

    I would bet they did have a code escrow agreement - in the event HP decided to back out of doing the software (which they did) WalMart gets access and use of all the HP source.

    The fact that Wal-Mart is shutting down operations shows exactly what use code escrow is - jack and squat. What is WalMart going to do with a bunch of hacked together HP code, without any of the people who worked on it?

    Plus in general a problem with code escrow is that you can't look at the source before you take it over to see how feasible that proposition really is.

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
  18. Re:this is just wrong.....it can't stand by mabhatter654 · · Score: 2, Interesting

    Walmart's problem is that "efficient" is not "unique". really look at the shelves and variety is gone.. they sell just 2 brands of most items, novelty items (toys, specific #2 name brands, back catalog of any type of media, etc) are the most generic version or scarce. They're good for staples (vegies, cereal, milk, bread), but poor for unique interesting things... the ones you get to mark up a bunch.. that's why Target is eating their lunch selling everything Walmart CAN'T because Walmart has beat up too many people and demands too much in their favor to be "efficient".

  19. Re:But they sure do take returns! by geekoid · · Score: 2

    "I will continue to shop there because their returns policy is crazy-in-my-favor."
    Thanks for letting us know your price for doing something you don't like.

    "think I have even taken back things that I purchased at another store."
    Ah, you lie and commit fraud, that explains it.
    You sir,are a Dick, and the reason places like wal-mart stop being customer friendly.
    You, and people like you, are the knife that is killing 'The Customer is always right.' policy.

    Dick.

    --
    The Kruger Dunning explains most post on /. http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
  20. Re:Unified pricing is short sighted. by ducomputergeek · · Score: 2, Insightful
    However, there are a great number of us who don't have a boarders near by. We do have a Barnes and Noble, but it lacks the CD/DVD section that you find in other stores. All it has is book and a small cafe. There is the CD store in the mall, but their prices are jacked up and then Best Buy, which doesn't stock a lot of classical music.

    iTunes, however, offers most of the tracks I want and with no waiting. Usually I can't get them any cheaper from Amazon. Plus there are a lot of times i don't want the whole album. I want 1 or 2 tracks. For $2 I can download and have it right there. For another $.50 (for the CD) I can burn to a CD-R and play it in my car.

    iTunes was the first with an easy to use interface, pricing that made sense, and a flexible enough DRM that balances out what the studios wanted and fair use.

    That's not quite the case with the video downloads. I bought season 3 of Battlestar Galactica last year because we didn't get SciFi at the time through the condo's cable plan. I backed them up to data DVD's when I switched to a new machine (and for archival purposes), but I can't go over to iDVD (or even DVD Studio Pro) and burn a playable DVD

    Personally I like unified pricing. One of the reasons why I use Dish network is that they'll play hardball with the content providers over price. If CBS suddenly wants 30% more to air 7 channels that I probably don't watch anyway, Dish yanks the networks until the CBS folks come down on their price. I'd like to see Al la carte pricing since I could get by with about 20 cable channels that I actually watch.

    --
    "The problem with socialism is eventually you run out of other people's money" - Thatcher.