February 6, 2007, 12:00 AM

Wal-Mart gives video another try—this time with digital

Though it was unable to compete in online DVD rentals, dropping that business in mid-2005, Wal-Mart is jumping into the blossoming video-on-demand market, launching a beta version of a video downloads store.


Jumping into the blossoming video-on-demand market, Wal-Mart Stores Inc. has launched a beta version of video downloads technology. The Video Downloads Store on Walmart.com includes more than 3,000 movie and television titles from Hollywood studios and television networks. Viewers store downloaded files on their PCs and can watch them on PCs, laptops and portable media players.

“This marks a significant step for Wal-Mart in home video, and enables us to better serve our customers as they begin to complement their DVD purchases with downloading of digital video content,” says Kevin Swint, divisional merchandise manager for digital media. “Also, we’re excited to launch a service that has the support of all the major Hollywood studios.”

New movie releases are available for downloading the day of the DVD release and range in price from $12.88 to $19.88. Older films start at $7.50 and TV shows $1.96 per episode.

The online store offers shoppers a movie connection feature that enables them to discover new movies through visual connections between actors and directors. The store also includes preview trailers and category/genre and TV network listings. The beta service uses new technology from HP Video Merchant Services.

Wal-Mart began testing video on demand in November with a promotion surrounding the DVD/VOD release of Superman Returns. Customers who purchased the DVD at a Wal-Mart store had the option of also downloading the movie at Walmart.com.

However, Wal-Mart, No. 12 in the Internet Retailer Top 500 Guide, was unable to compete in the online DVD rental market, selling its business in mid-2005 to Netflix Inc., No. 21 in the Internet Retailer Top 500 Guide. To compete in the video-on-demand market, Wal-Mart needs to better grasp the service model, like that of online video renting, as opposed to the pure retail sales model, says Jim Okamura, senior partner at retail consulting firm J.C. Williams Group Ltd.

“It’s a different mindset and involves different processes. This is not the selling of products per se, which Wal-Mart does better than anyone else. This is selling a service,” Okamura says, adding that though video on demand involves sales not rentals, it can easily become akin to a service if a video-on-demand site becomes the video-buying source of choice for consumers. “The supply chain in this case may have been thought through, but that doesn’t necessarily mean they’ve done the same for the customer-facing aspect of video on demand. And customer service will be a significant differentiator.”

Brian Osborn, vice president of category marketing at Walmart.com, will speak at the Internet Retailer Conference & Exhibition, June 4-7 in San Jose in a session entitled Wal-Mart: The Giant Uses the Web to Extend its Market Reach.

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