Walmart’s Customers Don’t Want to Download Their Videos

17 Sep ’06

I may be completely wrong about this, but I will admit to being entirely dumbfounded by the idea that Walmart is believed to be readying an online video distribution capability. This, only two years or so after Walmart popularized the $99 DVD player [Ed: now, $29, surely?], its customers – are what, clamouring to buy their movies online, so they can’t watch them on their TV’s, or on the computers they don’t generally use for anything other than light surfing and email – and in any event, will overpay for, at least compared to the DVDs they can easily buy and rent everywhere?

And from CNN:

The retailer is still apparently debating price models. One option Wal-Mart is considering is a free digital download of the movie along with a purchase of the DVD version at a Wal-Mart store. Another option is letting customers purchase a download of the movie for a few extra dollars when they buy the DVD version at the store. [Ed: There isn’t enough Kool-Aid in the world for me to drink before I’ll believe that Walmart customers need or want this].

A published report late last year said Wal-Mart was also considering installing in-store kiosks where consumers could use digital technology to download films on to portable discs. [Ed: because, I suppose, Walmart customers are just the people to explore whether or not their home DVD players accept burned discs, and of course because they’d rather a burned disc for the home collection than one with the studio’s packaging]

It’s not just about whether customers want this of course; it’s also about whether Walmart if the right provider. It’s a curious idea: even as the most aggressive media technology innovators are only dipping trembling toes in this water, Walmart is presumed to be getting ready to experiment with a distribution system that, at best, will for some time make only a negligible dent in the market, rather than waiting until all the kinks are worked out and the hard money spent by early market entrants, and the market is truly ready for success.

The obvious concern for Walmart – and this is where I would have thought the real story is – is that its historical strength – combining customers into massive buying power to drive down the price of manufactured goods – will be useless as a pricing advantage when distribution is digital and overhead diminishes. (Taking advantage of having customers in store to sell them burned discs at a kiosk strikes me as a poor cousin to an online offering.) Any advantage it hopes to have in digital distribution will have to come from other sources. Perhaps this is the interesting story about Walmart and digital video – how will it make the transition from one strength to the other? Does this mean that Walmart has to enter this market early – even before its customers want it to – so that it can build brand and develop the online capability gradually? It will have a lot of mistakes to make before it gets it right – before anyone does. I’m not sure, but on top of the difficulties any other would-be provider will have, those are sounding like awfully long odds to me.

Reality check on aisle 3, please.

Previous post:

Next post: