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Wal-Mart online film service has more method than madness

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Comment We have to say we are a little baffled by the trial film download service the Wal-Mart has launched, tied as it is to the purchase of a DVD from the store. The price is right, just $1.97 for a file that will play on a portable device (except which portable device, not another Windows device surely). It’s $2.97 for PCs and Laptops (yep it’s only a Windows version) and $3.97 for both.

There are lots of problems with this idea, but they are not all insurmountable.

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.

The second problem is 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.

But there’s more to this than meets the eye. In the process of getting portable copies of the first video, Superman Returns, Wal-Mart has got customers to download its download manager. That’s a neat trick, just as iTunes got customers to download iTunes because they wanted to use the store, now consumers have less interest in downloading other people’s software just to see a store. So Wal-Mart has to get customers to do it for a different reason. In this case it’s in order to create a small audience of beta testers for the Wal-Mart software, and in each case they have to create an account with Wal-Mart.

So far so good. If this was the final service that WalMart planned to launch the actual portable file could be delivered just as easily on the DVD, so we suspect the service will change between now and launch.

The Wal-Mart release mentions that customers can begin watching the movie while it downloads. Now what would be the point of progressive downloading if I had to wait to own a DVD. No this is simply a step by step ruse by which Wal-Mart wants to attract people to its online market.

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.

In the coming months, Wal-Mart says that it’s going to test additional DVD bundles with this convenient download option. So more and more people in the US will take a promotional loss leader video and download the store software. Later Wal-Mart will be able to communicate with these beta testers via that self same software. We wonder is the software just driving off servers or does it perhaps contain a piece of P2P software?

All will not be revealed, we suspect, until Wal-Mart launches on online service that does NOT rely on buying a DVD. After all this is all about how Wal-Mart survives the demise of the DVD. Isn’t it?

Copyright © 2006, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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