Rick Hanley

Movie Download Wars: Wal Mart Grasping at Straws

Cleared for Takeoff
Imagine in-store download and burn to DVD kiosks at Wal-Mart, Target, Best Buy, and/or Walgreens? Extremely cost effective availability of tens of thousands of titles. The content owners, retailers, and consumers all win. And the environment, too. No more online, physical DVD rental models that involve millions of physical deliveries each week.

What had been the key differentiator for Netflix, catalog films, will now be widely available to retailers. Clearly, we all want to see the day when in-home download is as easy as using the TV is today. That will come.




Video Business Online
DOWNLOAD-AND-BURN CLEARED FOR TAKEOFF
Movielink plans summer test with new CSS-enabled discs
By Paul Sweeting -- Video Business, 2/8/2007
FEB. 8 | The DVD industry has cleared the way for retailers and consumers to burn movie downloads to DVD for set-top playback.
The steering committee of the DVD Forum on Jan. 31 formally approved technical specifications for a new type of recordable disc for use with in-home and in-store burning of CSS-protected movies, removing the last remaining administrative hurdle to commercial deployment of download-and-burn services…

Online download services have been waiting for the approval to give consumers the option of burning movies they can now only play on their PC or portable device.
Studio-owned download service Movielink plans to begin testing burn-to-DVD downloads this summer and offer it to all consumers by the fall, chief marketing officer Mary Coller Albert said…

Wal-Mart also is said to be considering adding download-to-burn for its just-launched service.
“We expect that to improve over the course of the year, and we’ll continue to aggressively explore/evaluate opportunities and models for this option over the next year,” Wal-Mart said in an e-mailed statement…

With the final specs approved, disc makers can now begin manufacturing DVD Download blanks for sale to consumers and in bulk for enterprise applications such as in-store burning kiosks.
The discs are similar to standard DVD-R’s but are “pre-keyed” with CSS decryption codes so they can accept encrypted data.
The use of CSS—the same copy-protection system used on commercially pressed discs—is considered critical to ensuring that discs burned from downloaded movie files will be compatible with all set-top DVD players…

Initially, download-and-burn may be a bigger opportunity for bricks-and-mortar retailers that bring in DVD burning kiosks rather than for online download companies…

“In theory, it can be a very nice revenue generator [for retailers] without having to give up any kind of significant footprint,” Goodman said.

© 2007, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.
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Movie Download Wars: Wal Mart Grasping at Straws

Rentals are more likely to be a mechanism for cannibalizing DVD sales revenue. A download for $20 is worth more that a physical DVD sale for $20. Much less overhead on the download.

When considering the whole impact of Wal-Mart, consider this: Wal-Mart also announced, but received rare coverage of, the availability of 60,000 titles for sale by mid-year. With Wal-Mart's pricing power, guess what that means to Netflix, Blockbuster, etc.

Red Herring
The Business of Technology
Wal-Mart Intros Movie Downloads
…Wal-Mart will use the foray into digital movies as a way to build a full-service online store aimed at home entertainment.

“We view this as the first step to move toward a multi-format and multi-channel strategy,” said Cameron Janes, director of digital media for Wal-Mart. “We are looking at leveraging the digital platform to support manufacturing on demand and offer a range of movie titles.” Those include independent films, foreign films, as well as hard-to-find titles.

Willem de Zoete, head of HP’s digital entertainment services business, said the company is building a business based on custom DVD distribution.

About 60,000 DVD titles will also become available through a mail-order service in which consumers have an option to go online and order the discs. The service will launch mid-year.

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