13 thoughts on “Wal-Mart, The Grand Delusion, Part II”

  1. …I suppose you can’t blame a company for trying new things, but this is a silly initiative for a solidly “brick an’ sticks” company like WalMart.

    The only real question is whether it’ll last any longer than their failed previous attempt to take on NetFlix and Blockbuster…

    …and how does “no bargain here” $10-$20/movie mesh with their race-to-the-bottom pricing strategy anyway?

  2. On the other hand, people should be supporting Walmart in this endeavor. Walmart is one of the few companies that can force the studios to lower the prices on movie downloads. It just doesn’t make sense when a DVD (with more features) can be bought at a price lower than a download off of iTunes. The more successful Walmart and others are in this business, the more pressure they’ll be able to exert on the studios.

  3. Walmart today announced that they are officially jumping into the movie and television download business head first, and will launch their new site later today.

    This is an extremely crowded market and Walmart will compete against other movie download sites like CinemaNow, MovieLink, Amazon Unbox and iTunes. In addition to battling Netflix’s new service and an expected download entry from Blockbuster in the not so distant future.

    However, one major technology flaw for Walmart is the lack of a solid recommendation engine to discover the movies on the site.

    In 2005, Walmart was the scene of “RecommenderGate” when consumers looking for Planet of the Apes were directed to movies about Martin Luther King Jr. Expectedly this was found offensive to many and was all over the blogosphere. The end result was the whole recommender system being taken down and the loss of customer respect for the service. This problem could have been solved if they were using a more sophisticated recommendation engine like those used by some of its competitors.

    Don’t think they are up to speed with the recommendation engines being used by Netflix, Movielink and Blockbuster..

  4. The big hurdle on digital download as a business is not technology or media savvyness. It is ease of use and the power to get the media companies to agree to favorable legal terms. Walmart could probably hire the expertise it needs to solve the first three issues, and it is better suited than anyone to have the power to get the media companies to agree to favorable terms.

  5. Not fair Om – when old style companies miss the online boat we all criticize them for having their corporate heads up their corporate as**es. Here Wal-Mart is beating the dot coms to the punch and you imply they should let Steve Jobs do the job.

    Nope, this is a good and bold move, bravo Wal-Mart!

  6. Walmart sucks at just about everything it does, especially PR (thanks to Edelman), but it still makes money. Go figure.

  7. I have no problem with WalMart trying this.
    IF they succeed, great. Any pricing advantages they can get (IF) should also rub off onto others.

    I’m not a Wal Mart – or Target – or other semi-discount shopper. I can’t claim to know their customers. But it just seems to me that downloaded videos – and, really, music too) are a bit of a “luxury” and not a real “fit” for those stores. As was pointed out, DVDs and CDs are where the “bargains” are. The people with enough money to buy lots of movies this way just for convenience probably shop at Nordstroms – and Apple!

  8. This was smart move by Wal-Mart, with 40% of the DVD sales, they had to do this to protect their business. They have the money, distribution, and customers so it makes perfect sense. When Blu-Ray/HD-DVD takes off, they’ll still make dvd sales and will be able to offer downloads for customers who don’t want the dvd media.

    That doesn’t mean that can’t screw it up, especially if they put the wrong people in charge (i.e. clueless managers). Customers put up with slow lines in their store for the cheap prices, but if they make software clunky/buggy/slow, they’ll lose out to the next guy who will be waiting to scoop up all those customers.

  9. OM – Your observations re. customer care are right on. In the case of Walmart’s digital music service – Walmart on-line reps were inundated with calls re. music downloads (now thats for a .99 cent download with less than 10 percent margins). Walmart spent that and then some just fielding calls for a sub-par service). They may know how consumers behave in their isles while shopping – but as you put it well – know how they manage their devices at home is best left to the folks like Steve Jobs.

  10. Basically Wal-Mart (and Best Buy, Circuit City, Target, etc.) have a choice… they get into the e-retailing of music and video, or they lose a big fraction of their future business. Do we actually think that we’ll be buying movies and music on CD/DVD media 5-10 years from now? I think not.

  11. I always like reading comments from “experts”. Wal-Mart is in business to make profit; they must have thought this download business will be profitable so they will be doing it. People should just wait and see.

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