Wal-Mart Set to Launch Digital Movie Store Today

Wal-Mart Stores Inc. is launching the beta version of its online movie download store today, entering a market that has yet to capture the interest of consumers but is expected by to grow rapidly.

The site will sell digital versions of about 3,000 films and individual television episodes. Wal-Mart will not initially offer content from ABC, CBS or NBC, although the company said it hopes to add shows from those networks in the future.

The nation's largest retailer is using its buying power to beat the prices charged by other download services in many cases, offering films from $12.88 to $19.88 and individual TV episodes for $1.96 -- 4 cents less than Apple Inc.'s iTunes store.

Apple charges less for some films sold on iTunes -- $12.99 when pre-ordered and during the first week of sale, or $14.99 afterward. But it only carries films from two studios, The Walt Disney Co. and Viacom Inc.'s Paramount Studios.

Most studios have resisted signing deals with iTunes in part because of Apple's desire to sell movies at one price. Studios prefer variable pricing such as Wal-Mart is offering. (AP)

Apple's pricing has also caused scuffles between studios and major retailers, including Wal-Mart and Target. The retailers don't want studios to sell digital copies of films cheaper than the wholesale price of physical DVDs, which have a much larger profit attached.

Wal-Mart's online store will sell older titles starting at $7.50, compared with the $9.99 charged by iTunes.

Wal-Mart also used its significant clout to launch its online store with films from all major studios. The Bentonville, Ark., retailer accounts for about 40 percent of DVD sales, and studios have been careful not to anger their largest customer.

Given Wal-Mart's importance, the studios readily agreed to sell films on the retailer's new site, analysts said.

Unlike some offerings, Wal-Mart will not rent films online. The films can be played on a PC or transferred to Microsoft Windows Media-compatible portable digital players. The movies will not play on Apple computers or the popular iPod.

Movies bought from the Wal-Mart store also can't be burned onto a DVD, although the company said it hopes to offer the option by the end of the year.

(AP, Reuters, Businessweek.com)