Wal-Mart cancels movie download service
LOS ANGELES (Reuters) - Wal-Mart Stores Inc quietly canceled its online video download service less than a year after the site went live, a company spokeswoman said on Thursday. — Wal-Mart shut down the download site after Hewlett Packard Co discontinued …
Context & Ripple Effects
Wal-Mart's video download store lasted barely ten months. The site went dark on December 21 — days before Christmas, with so little notice that Gizmodo flagged that no one had noticed — after Hewlett Packard, which powered the download service behind it, decided the operation wasn't worth continuing to run, as paidContent put it.
The quiet exit lands in the middle of an odd year of Wal-Mart digital experiments: the retailer broke the $100 barrier on HD DVD players with secret $99 in-store specials in November, entered broadband as an internet service provider in October, and was even pitched as offering search engine marketing services. The download store was the piece that couldn't stand on its own.
First-order effects
- Wal-Mart is out of the movie download business entirely, less than a year after launch, leaving its digital-media shelf space empty heading into the holiday week.
- Hewlett Packard's decision to stop powering the backend — rather than Wal-Mart ending customer demand — was the proximate cause, meaning the storefront died when its infrastructure partner walked away.
Second-order effects
- The episode shows how fragile partner-powered storefronts are: any retailer renting its download infrastructure from a single supplier inherits that supplier's cost math, and HP judged the volumes weren't worth the power bill.
- Wal-Mart's other 2007 digital bets — the $99 HD DVD promotions and the broadband ISP entry — now carry the burden of proving the retailer can make money outside physical retail, since the flagship content experiment just folded.
Third-order effects
- If first-generation download stores keep dying at big retailers, digital video distribution drifts toward whoever owns both the platform and the content relationship, squeezing out retailers who merely resell someone else's pipeline.
- For Hollywood, each high-profile retail retreat narrows the set of credible non-Apple download channels, raising the stakes on whatever ownership or rental model studios back next.
The trend: Big-box retailers' first wave of partner-built download stores is collapsing under thin demand and unfavorable backend economics, leaving digital video to platforms that own their infrastructure.