The beginning of the end for Wal-Mart’s short-lived
online movie download business came when Hewlett Packard announced that it
was discontinuing the technology that powered the service.
HP spokesman Hector Marinez announced the move to discontinue the merchant
services that provide video-only downloads. Marinez said the business had
failed to meet expectations and that HP had finally decided to pull the
plug. He characterized the online video business as uncertain and rapidly
changing, and emphasized that the market is too volatile for HP's continued
Wal-Mart, left without a service provider, made the inevitable decision on
Thursday to pull the plug on the service, less than a year after its
inception. Wal-Mart spokeswoman Amy Colella announced that while the
retailer would obviously continue to sell physical DVDs online and in-store, Wal-Mart
was out of the download business for good. She declined to reveal any
specific sales figures about the floundering service.
One complaint was the service's restrictiveness. The service would only
allow the purchased movies to be played with Microsoft’s Windows Media Player
or the Wal-Mart Video Download Manager and could not be played on any computer
besides the one where the content was purchased.
Still, with its market power, Wal-Mart was expected
to turn the world of online movie download services such as
iTunes and Microsoft
LIVE upside down. Wal-Mart was the first to offer downloads within
the same day of physical release, which was thought to be a valuable key to
success. In the end its February debut fizzled out to a whole lot of
Wal-Mart was in the online video rental business two years ago, which it also
pulled out of, directing its former customers to industry
In 2006 online movie downloads only accounted for 1% of the $24.5 billion DVD
and home video market. Analysts expect this figure to dramatically show,
but as the death of Wal-Mart’s service illustrates, the outlook may not be as
cheery as some would like to imagine.