Wal-Mart not happy with looming threat of Apple iTunes movie downloads

Apple Store“The retail behemoth [Wal-Mart] isn’t happy about the iPod maker’s plans to offer movie downloads through iTunes,” Ronald Grover reports for BusinessWeek. “Has Wal-Mart met its match?”

“The guy from Bentonville, Ark., surely isn’t on any of Hollywood’s leading man lists. A 23-year Wal-Mart Stores veteran, David Porter is the person at the retail giant who orders DVDs and slashes prices to move them. But this summer, Porter has been one of Hollywood’s hottest acts, taking meetings with top studio brass like a producer with a hot script. His pitch: Wal-Mart isn’t happy,” Grover reports.

“That prospect tends to send shivers through Hollywood’s Gucci-toed corner offices. As the largest seller of DVDs, Wal-Mart accounts for roughly 40% of the $17 billion in DVDs that will be sold this year, a financial lifeline to big-spending studios. But now Wal-Mart’s video business faces a potential threat by Steve Jobs and Apple Computer, which in mid-September, sources tell BusinessWeek, plans to announce it will start offering movie downloads from its iTunes store,” Grover reports. “The notion of kids running around with full-length movies on new, wider-screen iPods that Apple is expected to unveil as well is causing grief in Bentonville, according to Hollywood executives.”

“With Wal-Mart CEO H. Lee Scott assigning his point man Porter to roam the halls of major studios, skittish executives have for months delayed giving Jobs the rights to distribute their movies through his new service. The price Apple hopes to charge, now set at $14.99 for new releases and $9.99 for older movies, has risen from Jobs’s initial plan to offer new flicks for $9.99, say industry insiders.

Grover reports, “So far, Apple only has one studio signed on: Walt Disney (DIS), where Jobs is the largest shareholder following the entertainment giant’s purchase of his Pixar Animation Studios. News Corp.’s Fox Entertainment Group may join in later, as might independent Lions Gate Entertainment, say Hollywood sources, but only if other studios come along, too. So far, other large studios have taken a pass, especially after Wal-Mart earlier this year threatened not to sell Disney’s High School Musical for a time after Disney released it initially only on iTunes.”

Grover reports, “What does Wal-Mart want this time to play nice? Executives who have met with Porter say it wants marketing help when it launches its own planned download site. And it wants Hollywood to trim the current $17 wholesale price for DVDs. That would let Wal-Mart slash its own prices to the same $15 or so that Apple would charge. (The plan is for Apple to pay a $14 wholesale price for new releases, say sources, although negotiations continue.)”

“Wal-Mart isn’t the only issue that’s giving some studios pause. Several are concerned about Apple’s rules for using iTunes, which let users watch a film on up to five different devices. And others worry about letting Jobs set a download price they can’t change, as he has done in music. Still, studios have embraced the digital concept and accept some ‘burning’ of movies to DVDs,” Grover reports. “patience for all this tiptoeing is wearing thin. Jobs recently hopped aboard his corporate jet for a little politicking of his own in Hollywood, and insiders say he called Scott to express the concern of a vendor who sells tons of iPods and Macs through Wal-Mart stores.”

Many more details in the full article here.
Mediocrity (at best) purveyor for the masses Microsoft, er… Wal-Mart can’t hold back the future forever. Apple is the future.

Related articles:
Lions Gate CEO slips, says films coming to iTunes – August 17, 2006
ABI Research: iTunes could be Apple’s ‘Trojan Horse’ in home audio-video market – July 27, 2006
Apple’s ITunes Movie Store to offer feature film downloads that can be burned to DVD? – July 19, 2006
Does Apple face delivery issue if they want to sell movies via iTunes Store? – June 28, 2006
Apple prepares debut of full-length feature films via iTunes Store in time for 2006 holiday season – June 20, 2006
Report: Movie studios flatly reject Apples’ proposed $9.99 pricing for feature films via iTunes – June 19, 2006
Report: Apple in negotiations with movie studios; $9.99 feature films coming to iTunes soon? – June 19, 2006

53 Comments

  1. Most of the demographic that would download

    movies from ITMS probably wouldn’t be caught

    dead in Walmart anyway. I’m one. If I go to

    Walmart (VERY rare), it’s because I need a

    fishing lure at 3:00 AM or something crazy

    like that.

  2. FSCK Wal-Mart.

    Like LinuxGuy said, what are they gonna do? Stop carrying movies?

    Wal-Mart COULD refuse to sell movies…from ONE studio. Who wants to be the one left out?

    Let Wal-Mart blacklist Pixar/Disney. Other retailers will be more than happy to take the market (and consumer draw) of those titles.

    Wal-Mart would be the one left out here.

  3. Wal-Mart DOES have influence and the movie studios ARE being very cautious of Apple, hence the increased prices.

    Let’s face it — the future of music and movies is digital distribution, but the prices are not where they need to be yet.

    If you live in the middle of nowhere, maybe the convenience is worth it. Otherwise, there’s a Wal-Mart, Best Buy, Circuit City , Target or another retailer within a few miles that sells a higher quality hard copy for the same price.

    Movie studios SHOULD offer iTunes-ready versions on the DVD versions for NO ADDITIONAL COST — it’s one extra that somebody might actually use.

    Movie and music prices need to come down. I refuse to purchase an entire CD off iTunes because there are never enough quality tracks that make the purchase worthwhile. I’ve bought hundreds of singles, but never an album. Not until the price is closer to $6.99. $9.99, $12.99 or even $14.99 for a CD. No thanks, I’ll buy it for less and rip it myself!

    I think $9.99 for movies was the magic price point if the quality was half way decent. Hell, I can rent movies for $1 from a DVD vending machine at the grocery store by my house. How many movies do you watch over and over?

    Use Handbrake or Mac The Ripper if you want to keep it or transfer it to your ipod. I don’t endose stealing, but the industry needs to get with the times and stop trying to sell the same repackaged content over and over.

  4. I second TrevX – When did Walmart start selling Macs?

    I’ve seen their iPod displays, but Apple was selling iPods for a long time before Walmart started carrying them.

    On the other hand, Walmart throwing it’s weight around like this reminds me of Microsoft… I wonder if an anti-trust lawsuit is in their future.

  5. It’s about time that someone shows Wal-Mart the back door – they need to learn that they can’t always push folks around and get away with it!

    They need to go home and play in their own smaller sandpile for a change!

    What’s wrong with America today starts with Wal-Mart!

    Some of the crap Wal-Mart has been puching for years is starting to come home and it looks as if it’s going to bit them in their ass for a change – good for Apple!

    Wal-Mart is like a little kid who’s been told “No” – now their mad – big deal!

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