December 2, 2006
Wal-Mart Offering Digital Downloads for Movies--If You Buy the DVD First

Wal-Mart is the newest name involved in the digital distribution of films, with the company's new program to stick its toe in the download market with an interesting program--making digital copies of films available to those who buy a copy on DVD.

Here's an interesting way around the complaint that movies don't allow one to see them in any platform you want to with digital rights management blocking copying them from one format to the other. Wal-Mart will not mess with its DRM but rather allow a corresponding download along with the purchase of the film on DVD.

The test film? Summer blockbuster Superman Returns.

Brad Stone with The New York Times suggests that the download service may be a sign that "the decade-old DVD moved two small steps closer yesterday to technology's endangered-species list."

But don't think this is out of the goodness of the retailer's heart. No, according to Amber Maitland in her post on the business initiative with Pocket-lint in the UK, "Customers who buy a copy of the DVD will be able to choose a $1.97 download for portable devices; a $2.97 option for computer-compatible download; and a $3.97 version that works on both."

Aside from Wal-Mart's token $.97 price tags, what does this being a Wal-Mart product mean? Of course, a set of limits to watch them on Windows Media Player, as downloads will only work through Windows Media Player, and "PC-compatible downloads will only work on Windows XP with Windows Media Player 10."

Customers who purchase the digital copy will be given a code and can then go to Wal-Mart's beta site when they get home to download the film.

On The Register, poster Faultline writes, "If I have to go to the store or order a DVD for delivery from the store, I have to wait for the video experience. I might as well join Netflix," and goes on to write that, "if I can only redeem my cheap online copy of the film after I have the DVD, why do I need the portable copy. After all I have the DVD. It does seem that Wal-Mart has an obsession with shipping DVDs instead of creating a new online business." (sic)

Faultline suggests that the whole promotion is just a ploy to get viewers to download Wal-Mart's download manager, thus planting the seeds for an exclusively download service in the future. "Of course once established, this online market will NOT have content at $3.97 for download to own with two types of file. But that's a negotiation with the studios and its "most favored nation" clauses and best pricing, and it sounds like the eventual Wal-Mart service will just mirror the pricing of Apple and Amazon, which is already established."

Scott Kirsner over on CinemaTech writes that the problems he sees are threefold: first, that customers don't like buying the same product over and over again; second, that the pricing will be too low to properly offer tech support; and, third, that the lower price may set the precedent for download prices that users expect, which may be a problem for the industry as a whole.