“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
Wal-Mart has no leverage. What are they going to do if their demands are ignored — refuse to sell movies? Fat chance.
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.
LinuxGuy and Mac Prodigal Son:
Refuse to sell iPod’s and Macs
“come” on
Wal-Mart COULD refuse to sell movies…from ONE studio. Who wants to be the one left out?
I go to Wal-Mart all the time and I would download movies from i-Tunes.
Since when did Wal-mart start selling Macs?
I do shop a Walmart for cheap shit, But I also shop at Apple for quality.
Wal-Mart is just a big, oversized Dollar Store. There are some good stuff there but it’s mostly cheap (low quality) goods…junk.
Why did it take so long to realise what Apple is doing? It’s always audio first, video later.
And more to come….. we haven’t seen the best parts of Leopard yet!
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.
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.
Just one more reason not to shop at walmart.
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.
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!
I havent spent a dime in a Walmart in over 4 years. I’ll never walk through their doors again.
Jerks.
There is no need to tiptoe around Walmart.
If people don’t find what they want there, they will go somewhere else that does have it. Ever heard of Best Buy, or Sam Goody, or Virgin, or Target or K-Mart or… you get the picture. Who cares if Walmart sells or does not sell a particular item? Probably nobody. If I want an iPod, or a movie and Walmart does not carry it, does that mean I’m not going to purchase it at all?
Of course not! I don’t enter a Walmart very often, but I don’t shop at stores just because they carry a certain name on the door. I shop at the stores that carry what I want.
Digital downloads are not going to cut into Walmart’s margin very much at all in the near future. It’s actually faster for me to drive to a Walmart and get the DVD than to wait for the full length film to download to my computer. Much faster… even with a 3Meg download connection. It will be some time before the last mile bottleneck will be overcome.
Wal Mart has the most successful retail marketing model ever used. It is more efficient than any government or private organization, hence their Katrina relief. I fault them for nothing (but I shop Target, they are closer). Apple has the most successful online download model. Simple and elegant is their mantra. The consumer will decide, and chances are they will both sell a lot of movies. We are all winners if they are in competition.
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.”
Great Reporter… LIONS GATE already announced they will be working with Apple and iTunes… reporters, the laziest of all workers…
fsck Wal-Mart.
Walmart is satan
One word … antitrust
I’m ashamed…I bought my iPod at Walmart. Darn!
I don’t live in the US – how much do Wal Mart charge for movies?
Do the Movie houses sell DVD’s to Wall Mart for the same price as a high street store? If not, surely the movie houses stand to make MORE by Wal Mart refusing to sell.
Because people will not stop buying movies if they can’t get them at Wal Mart. Surely?
I bought my first “Mac” at Wal-Mart.
Best purchase I ever made.