Taking on Apple's iTunes Store and Amazon's Unbox, Wal-Mart (WMT) opened its video download site today, the first to include movies from all six major studios. It's nice to have negotiating clout. Prices range, but a recent release like Talladega Nights costs about $15, the same as it would on Amazon Unbox (iTunes does not carry Talladega Nights, but it's movies cost the same). All movies are download-only. There are no $4 digital rentals, as there are on Amazon—which come with tons of restrictions, but at least you have the option.
If the budding digital distribution of movies and TV shows depends on price alone, then it will be difficult for anyone to compete with Wal-Mart. But technology companies like Apple and Amazon have a chance in this race because they can offer digital extras that Wal-Mart will always be trying to catch up with. Apple (AAPL) has a lock on selling movies and TV shows to people who want to watch them on their video iPods or soon-to-ship Apple TVs. Amazon (AMZN) is a natural place to look for movies when you are browsing online, as is Netflix (NFLX). But Wal-Mart? It's not the first place I think of when I want to find downloadable digital entertainment.
If they can beat the pants off of everyone else on selection and price, that might change. But it's only a matter of time before everyone else fills out their online inventory to include all the major studios and every TV show on the planet. After all, there are no physical inventory costs, and the media companies will eventually want to distribute their videos in as many places as they can.
So that leaves other bells and whistles like seamless integration with the hardware on which you are going to watch the videos (Apple), the option to rent content that later will digitally disappear (Amazon), or making digital versions free with an existing DVD rental subscription (Netflix). These other companies will always out-innovate Wal-Mart because they have more at stake. At least Wal-Mart is smart enough in this case to outsource the technology behind its video download store to HP. Still, the video download business will be nothing but a freckle on a rounding error for Wal-Mart for years to come.
But one thing's for sure: the movie download business is quickly taking on the trappings of a mainstream business. All it needs now is paying customers.