Apple vs. Wal-Mart on movie downloads
Blogland is in a tizzy following a BusinessWeek report that Apple's iTunes will begin selling full length movies -- and that Wal-Mart is, as TechCrunch puts it, pissed. Here's the story: Everyone has been waiting for movies to go legal on the Web, and now Steve Jobs reportedly is ready to pull the trigger on launching an online movie store. Problem is, says BW's Ronald Grover, "Wal-Mart accounts for roughly 40% of the $17 billion in DVDs that will be sold this year." So when Wal-Mart CEO Lee Scott grumbles, Hollywood listens close. Pricing, you see, is the rub.
It seems Jobs wants to charge $14.99 for new flicks and $9.99 for older ones. But Wal-Mart currently pays $17 wholesale for its DVDs. Naturally, Scott & Co. want their wholesale price slashed so they can compete. They also plan to launch their own movie download site, and thus want Hollywood's backing for that as well. (This prospect prompts John Dvorak to quip: "And we all know what a wonderful job Wal-Mart does selling downloads -- instead of cotton-poly T-shirts and disposable diapers.") If the early Web response to Apple's proposed pricing is any indicator, neither Wal-Mart nor Apple will be selling many movies online any time soon. One Dvorak reader puts the issue like this: "I love being on the bleeding edge, but no frigging way am I paying close to retail for highly compressed digital movies loaded with DRM. I don't care if Apple, Wal-Mart or Jesus is selling them. If those are the prices, count me the hell out. I'd rather be branded a thief and download stuff from Usenet or the Russian mob."And this opinion is fairly widespread -- if not always expressed so colorfully. In the heated Digg discussion, one reader points out simply enough that "for $15 a month you can subscribe to Netflix. That will get you around 15 DVDs a month." And another suggests a trip to Blockbuster might actually be more convenient given "how incredibly long it will take to download" feature films. Not that any of these concerns daunts the Apple faithful, who are again frothing at the mouth in anticipation of the release of the new, widescreen iPod, which iLounge predicts may come within days. It seems Apple is busy "inviting members of the press to a special event for new products, to be held on September 12, 2006," at "an as-yet-undisclosed location in Northern California." One thing's for sure, nobody does product launch hype -- not Hollywood, and certainly not Wal-Mart -- better than Jobs. Apple has a "cult" following of sorts. Music is still freely available via illegal sharing, and you can easily go to cheaper pay services than iTunes ($0.79 without DRM). Even with such competitive pricing in the Mp3 sector, Apple still comes out ahead.
People will definitely use the Apple video service, but you won't see nearly the purchasing traffic that iTunes, Netflix, or Wal-Mart's DVD section enjoys. Until prices are dropped significantly, I don't really see this affecting companies like Wal-Mart or Netflix. The simple truth is, why would you pay $14.99 for a "DVD" that's DRM'd, compressed, and took +60 minutes to download? I can go to the local store less than 2 miles away and buy the same DVD minus the restrictions. While I can't say I agree that thieving movies via Bit Torrent is the answer, the idea that purchasing a movie for $15 that will only play on iPods, will have a lower resolution than VHS and won't burn to a DVD is hardly one I see catching on all that quick.
Stupid little screens don't make for great home theater, so I hardly see the Apple move as particularly threatening to the DVD industry - which is why Hollywood is totally okay with it, and why they won�t allow Walmart to distribute full resolution DVDs via the internet (particularly if they could then be burned to any sort of media). Sure I want huge, clunky, blue screen of death Media PCs taking the place of the sleek multi-disk DVD players in my living room and bedroom � not! What made DVD so popular was high quality and ease of use. Low resolution, drm'd movies that take hours to download, won't play on DVD players (or even rival portable media devices) hardly fit that profile. 
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