Wal-Mart's Movie Download Store: Par For The Course, Except Prices End in $.88
from the yaaaaaaawn dept
When Apple was negotiating with movie studios to get the rights to sell movie downloads through the iTunes Music Store, Wal-Mart got a little worked up and expressed its disdain for movie downloads to the studios, in an attempt to protect its position as the country's leading retailer of DVDs. Apparently it got over that, as it's now launched its own video download store, selling movies from the six big major Hollywood studios, and TV shows from a handful of networks. After Apple started selling movies, Wal-Mart was apparently lobbying for better wholesale pricing and marketing support from the studios for its download service. It's not clear if it was successful, but it would certainly appear that its strength in DVD sales, as well as its support for variable pricing, won it wider studio support than Apple's been able to gain. But that's probably irrelevant, since the Wal-Mart service sounds like it's just as bad as all the other ones to come before it: no DVD burning, limited PC compatibility, and restrictive DRM. While some older movies may be relatively cheap at $7.50, it doesn't sound like the prices it's talking about for new movies (about $13-$20) will offer much, if any, savings over the price of a DVD. So let's see here: a minimal amount of added convenience, in exchange for a movie most people won't be able to watch on their TV or put on a portable player, as opposed to a DVD for pretty much the same price. Yup, sounds like a typical movie-download service, so expect the typical level of success to follow.
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Why do they bother?
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der!
DVDs require packaging, which required graphic designers, printers, binders, and machinery to duplicate the dvds. Plus you have to have people stuff the inserts, shrink wrap the DVDs and put them in boxes for shipping.
Then they have to be shipped to retailers who require more labor and effort to sell and display them.
I think it is totally cool that this can be done for less than $20.
However, on a dowload site, I am using my bandwidth, my time and my computer to get the movie. No packaging, no shipping...sure there is some nerd labor, but not nearly the manhours required to produce the physical dvd. In return for saving the studios and retailers a TON of money, they cripple the file so it is mostly useless and then want me to pay the same price.
HELLLLOooOOooOoo!
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Agreed
And they wonder why the e-book market is dead in the water...
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Re: der!
I think it is totally cool that this can be done for less than $20.
Far, far less than $20. All of the stuffing, shrink-wrapping, and boxing is automated as well. Bulk duplication cost, including shipping to the studio's warehouse is less than $2/ea. Physical media is cheap.
The studios sell these to Wally World for a hefty markup to cover marketing, royalties, their cut, etc. at which point Wal-Mart sells them for a hefty markup because that's the nature of their business.
Any doubts to this should be covered by the budget bin, and the knowledge that WMT is making between 30% and 40% margin on every one of those "2 for $11" and "3 for $12" movies they sell. The media is the same as the new release they're selling for $22.
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Still costs associated
There is a new digital revolution coming that all media will be delivered to our homes digitally. The phone companies are working on delivering fiber to our front doors to make our TVs and other equipment IP-based.
I for one am pushing for this technology; just imagine a new release hits the self on Tuesday morning and could be on your TV before the stores open. Not to mention if it's a popular item it may be sold out. You can't sell out of something that is digitally managed.
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Re: Still costs associated
HAHAHA, hehehe, oh, that was absolutely hilarious. I love that line...
They have been talking and trickling tidbits for years. No major telco has plans to roll this out en mass. All of them are doing piece mail projects in spotty locations. Find one major city where a quarter of phone customers have FTTH and I show another crappy FCC report on broadband penetration.
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Not for free
First, there are the development costs, in this case, the expenses associated with implementing the technologies necessary to deliver the videos over the new medium. These can be astronomical, and aren't limited to server, software engineer, and IT expenses. These could also include paying in-house web designers, UI designers, customer service reps, etc. (all of this, as opposed to simply purchasing DVD's from the studio/registered vendor)
Next, there are the fees associated with paying for the rights to distribute the files...this is significantly higher than simply purchasing the DVD's from a studio.
After this, there would be the marketing and sales expenses related to the new product line. People can walk into a wal-mart, and see the DVD's they have for sale...but if there aren't any additional advertising efforts, people may never know there are movies available for download from WMT.
These are only a few of the costs associated with delivering movies over a new medium. It's no wonder the prices are set the way they are.
It will take time to reach economies of scale significant enough to reduce the price without creating negative margins.
If people would stop typing, and simply attempt to consider other related variable expenses, posts like #3 (wifezilla) would never happen, and the world would be a better place!
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Re: Not for free
No scale of economies here either, because there isn't a substantial amount of overhead to be amortized. Most of the cost would be fixed and ongoing. You can be sure that they have analyzed this down to the smallest detail and know how much to charge per movie in order to be making money in short order.
If you would stop typing, and simply attempt to consider...oh, wait...you already said that :-P
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Re: Not for free
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Who said it was free?
As for "astronomical" costs, Apple manages on less than 10c/song... and on that they developed iTunes on Mac and PC, and run the iTunes store.
There is a cost... but it is damned small when amortized over thousands or millions of copies.
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RE: Not For Free
its more like highways and roads as to automobiles dude! the roads and freeways have always been there, all they did was put another car in the road. whether the car sells is up to the consumers...
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Correct pricing
If I can't create a DVD from the movie to watch it on my tv it has the same (actually less) value then a rented movie. Because a month later I wont have the necesary diskspace to keep the movie and it will be deleted (not to mention harddisk crashes, new computer, ... )
So, if it has the same or less value, the price should reflect this.
However, if I can buy (download) a movie that enables me to write it to DVD (any format: PSP, cellphone, even ascii should i wish it) then asking a full DVD price is justified. Because I will know that I will still be able to watch the movie a year later, even if I changed computer, tv, .. whatever.
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...just don't get it
I don't know what the person meant when they were referring to amortization, but I don't think it really has anything to do with economies of scale. It is about decreasing the expense of an asset over a set period (useful life).
The price seems too high to actually be a feasible alternative (to the consumer) to actually buying DVD's.
If WMT analysts had seen a way to set a lower price, they would have.
I see a post above where someone says that they're using their bandwidth, and their computer to download the movie...so it should be cheaper. Last time i checked, you had to use YOUR car and YOUR gas to get to wal-mart and pay them by taking money out of YOUR wallet in YOUR jeans.... Seriously...lets look beyond the end of our nose before we start blogging.
It's blatantly obvious who here has Business experience and who is sitting in a dorm room.
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Re: ...just don't get it
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Re: ...just don't get it
If WMT analysts had seen a way to set a lower price, they would have.
First, bull.
Sorry. What I mean is, I think you have more faith in the magnanimity of Wal-Mart than they deserve.
Second, the studios are dictating the price. Wal-Mart negotiates for a price that they believe will draw enough customers to make the venture worth doing, but it is still a dictated price. That means it is arbitrary. That means that the price charged has NO DIRECT BEARING on the cost of distribution.
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Price isn't everything
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$14.88 for a download, that I can only watch on my PC, that I can't share with my niece or mother, that certainly will look crappier than the DVD.
Plus having to use internet explorer. Plus sharing a host of personal info with walmart that will keep it forever.
It really sounds like a good deal!
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All the details of the system are already done, since they have some sort of shopping cart for online purchases, it would be a trivial task to allow you to download the movies you purchased. Some sort of script should be able to provide a link on the HTTPS page which you can download to your desktop. Whilst this would notbe overly hard to crack, I doubt that anyone would bother, since it would be easier just to torrent the DVD. THis would leave as the only major costs the liscencing, which should be no more than a DVD, and the hardware.
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Porn will lead the way
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over-priced, over-protected
is it significantly cheaper than buying the DVD?
buying moving downloads from this site would be like paying $150 for a DVD that will only play on Toshiba DVD players with model numbers ending in 3's and 5's.
this will end up failing fast once people see the price and the DRM restrictions. you can get better quality, better selection, faster releases, faster downloads, without DRM restrictions from other free sources.
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Dorm Room???
Well, I happen to own a business.... a printing/graphics/marketing company with a retail location. I know how much reproducing a DVD costs because it is something I actually DO.
Anyone who thinks it costs more to send a completed file over the internet as it does to burn the DVD, create the packaging and ship is smoking something funny.
As another poster pointed out, the cost to Wally World for a DVD is WAY less than $20...I was speaking as to the costs to the consumer. I KNOW it isn't going to cost Walmart the same to send me a file as it did to get that DVD on the shelf. So I would have to be stupid to pay the same amount of money for the file (that I can't use the way I want anyway) as I do for the physical DVD.
And speaking of ebooks...yeah...DRM has pretty much screwed that up too.
In conclusion, I guess it is better for people to think I am sitting in a dorm room while I am actually running my business than to actually be living in my parent's basement smoking pot as I assume some posters must be.
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