Wal-Mart entered the downloading realm today by offering movies and TV shows online, but without the usual advantage that the retail store has–low prices–will the endeavor succeed?
You can now purchase a movie digitally from walmart.com and they will download onto your hard drive. The titles seem considerably less than the in-store product, like “Thank You for Smoking,” which retails for around $20 in store, can be downloaded onto your computer for a little less than $15. And “Ice Age 2,” which has an in-store price around $17-20, will only cost about $15 for the digital version.
But any debate concerning downloading movies/music inevitably shifts to Apple and iTunes. The world-famous retail outlet seems to have a jump on Steve Jobs’ and Apple’s list of movies, but really Wal-Mart has very little advantage in this market because of the transportability of their downloads, and because the retail giant has moved away from its competitive advantage or market niche.
If you download a movie from Wal-Mart, it can only be watched on your computer. Forget the iPod. This means as Apple builds its digital library; the need for Wal-Mart’s intransigent version will decline. The prices are similar so why not take the movie that you can watch while working out at the gym or waiting at the doctor’s office.
This leads to the second reason Wal-Mart’s endeavor is doomed for failure; “The everyday low prices.” Why has Wal-Mart become the worldwide super-giant, and in the process made the Walton’s among the richest people on Earth? Their bulk, that is what leads to Wal-Mart’s low pricing. They have so much of everything, that when you go to a store to buy a vacuum, they can sell it to you for less, but in the digital realm there is no inventory. Wal-Mart, or Apple, or whomever can have an unlimited number of downloads of the same movie or T.V. show available, as long as the company’s servers can handle the traffic.
This is illustrated in Wal-Mart’s pricing of T.V. shows. On iTunes most television shows cost $1.99 and Wal-Mart offers the same ones for $1.96. A price a mere three cents less than the iTtune alternative? That is not the Wal-Mart way. Not to mention, many T.V. shows, particularly those on ABC and MTV, can be seen, for free, immediately after the original airing.
The Super-store has entered into a new, intangible world that it does not know or recognize, and without creating a true advantage, it will soon find itself extinct in the digital universe.