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Wal-Mart Scraps Video Downloads

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By JON GAMBRELL, The Associated Press

Published: December 29, 2007

LITTLE ROCK, Ark. - Wal-Mart Stores Inc. has closed an online movie download service it launched less than a year ago.

The retreat for Wal-Mart, which accounts for about 40 percent of all DVD sales, follows the company's 2005 decision to abandon efforts to build an online DVD rental service. The world's largest retailer instead turned its rental service over to Los Gatos, Calif.-based Netflix Inc.

Wal-Mart still operates a music download service and continues to sell CDs and DVDs at retail stores and over the Internet for shipping by mail.

A message on Wal-Mart's video download Web site said the store closed Dec. 21. The Web site said customers who have bought movies could continue to watch them.

In a statement, Wal-Mart spokeswoman Amy Collella said the company closed the store after Hewlett-Packard Co., which provided the software running the site, "made a business decision to discontinue its video download-only merchant store service."

Fayetteville-based Wal-Mart did not say whether it would attempt to start the service again using a different company's software.

Officials with Palo Alto, Calif.-based HP did not return a request for comment Friday.

Launched in February, Wal-Mart's video download service initially included 3,000 films and television episodes for customers to buy and watch on their computers and in some cases a portable device. The movies, however, do not work on standard DVD players or on the market-dominant iPod device from Apple Inc.

Wal-Mart's departure leaves Apple's iTunes store and Amazon .com Inc.'s Unbox service among the options for movie downloads, which haven't garnered as much consumer interest as online music sales. Last month, Time Warner Inc.'s AOL also scrapped its pay-for-download movie service.

Wal-Mart initially offered films from $12.88 to $19.88 and individual TV episodes for $1.96 - 4 cents less than the iTunes store. Wal-Mart's online store sold older titles starting at $7.50, compared with the $9.99 charged by iTunes.

Many studios have resisted signing deals with iTunes in part because of Cupertino, Calif.-based Apple's desire to sell movies at one price.

Studios prefer variable pricing such as Wal-Mart offered.

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