Wal-Mart (NYSE:WMT) has made enough mistakes recently that most of its competition may not be overly concerned when the company launches a new service.
That could be a mistake. Hewlett-Packard (NYSE:HPQ) is providing the technology for Wal-Mart to launch an on line video store and DVD-by-mail service. All six Hollywood studios have signed on: Universal (NYSE:GE), Paramount (NYSE:VIA), Disney (NYSE:DIS), Warner (NYSE:TWX), Sony (NYSE:SNE) and 20th Century Fox (NYSE:NWS).
The video download business is currently crowded with companies like Amazon (NASD:AMZN), Apple (NASD:AAPL), and private companies including Movielink.
NetFlix (NASD:NFLX) and Blockbuster (NYSE:BBI) have begun to move into the download market as they see their business of physical DVD rentals eroded by internet download operations.
If Wal-Mart is successful with the new service, shareholders at NetFlix and Blockbuster better duck.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
2-07-2007 @ 12:02PM
zeeone said...
I think people are foolish to believe that video downloads are going to erode dvd rentals anytime soon. Until the technology trickles down to Nascar nation and you have the average Joe dowloading movies, which I don't see becoming the norm for at least another five years, I'll keep my money in companies already generating huge profits from DVD rentals ala Netflix.
2-07-2007 @ 11:50AM
Tjones said...
The real story is the technology provider,HP Video Merchant Services. www.hp.com/large/dmp/video_merchant_services.html My bet is HP has negotiated the digital rights with studios, regardless of retailer. So I would predict other retailers, real soon, to announce their web store fronts utlizing this new HP service. Also if you read the info on HP's site, they mention physical delivery. This would allow making DVD's on demand for customers. HP is the enabler here. I would give them a close look, even as they close in on a 52 week high mark, as this is only the beggining.
2-07-2007 @ 8:10AM
Charles said...
The Walmart DVD download system IS a mistake and I'll tell you why. Downloads are going to cost $12.99-$19.99 and it takes up a ton of drive space, so most will burn it down to a blank DVD. They cost $3.00 each. Now I'm up to $23 for one movie. With Blockbuster I can view UNLIMITED movies for 17.99/month. If I really like a movie and want to add it to my library I can buy a previewed movie at Blockbuster for $5.99 and it comes with the COOL original box. The major studios aren't going to hurt their HARD DVD sales by allowing cheap downloads. That's why they insisted on this price range from Walmart. You need to get all your facts right before you write a blog.
2-08-2007 @ 11:37PM
Ron said...
With the class of people that shop at Walmart by the time they figure out how to order online rentals I will have sold my stock at a nice profit. Just think about it, most of them don't even have insurance let alone a computer!