So it seems Wal-Mart is entering the digital movie download service. But they’re doomed to fail. I combed the article looking for how Wal-Mart is going to distinguish itself from Apple’s iTunes. You know, that competitor that has nothing but dominated the digital download market? Instead, I found that the only thing they could talk up was:
It will have access to 3,000 productions, including films like “The Devil Wears Prada†and “Little Miss Sunshine†and TV series like “24†and “Veronica Mars.â€
So they’re going to have more movies than iTunes? There are three questions anybody is going to ask: Do any of those 3,000 movies play on my iPod? Consumers won’t be happy to hear the answer. And will you be able to burn the download to DVD? No.
Mr. Swint of Wal-Mart said the company would create discounts that encouraged shoppers to purchase both DVDs and digital videos.
Wow, so what part of this will be appealing to the average consumer? The price, perhaps?
Nope. The worst part is the pricing.
To avoid running afoul of studios, who want to protect their DVD business, Wal-Mart said the price of a digital movie would be comparable to that of the DVD at its stores.
How will Wal-Mart become king of the movie download business if they are purposely inflating their prices. If there is a better form of self-sabotage, it would be the equivalent of oil companies building electric cars, but pricing them too high to protect their gasoline market. We all know how that would turn out.
But the shooting-of-feet doesn’t end there as evident by this little tidbit:
It will have to pass the same test all services do at Wal-Mart.com: to lure customers into Wal-Mart’s 4,000 stores, to buy groceries, electronics and clothing… “If you are doing digital distribution, you are doing it because you do not want to be in the store,†said Mr. Goodman of the Yankee Group.
The single greatest incentive to buy a digital download is so you don’t have to get off your lazy butt. Unfortunately, the success of Wal-Mart digital downloads would also means decreasing a customer’s likelihood of entering the store – something they will stop at all costs.
Wal-Mart seems to have too many conflicting interests to want to make this work. This will fail just like their online DVD rental business.
Update: It seems TechCrunch seems to mostly be in agreement, mostly focusing on the price being “too high.”
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.