According to several media reports, Wal-Mart (WMT) has shut its movie download business. It blames the fact that Hewlett-Packard (HPQ) is discontinuing the technology platform which makes the service work. It is hard to believe that some other technology company could not do that.
What Wal-Mart probably discovered is that an e-commerce site, no matter how large, may not be able to sell consumers shirts, garden tools, and sporting goods along with downloads of the latest movies and TV shows.
Wal-Mart was early to the digital video download business. Walmart.com is one of the three or four largest e-commerce websites in the country. It had 42.5 million unique visitors in November, according to comScore. But, it would appear that the digital download crowd is going to Amazon (AMZN), Apple (AAPL), and Netflix (NFLX) for their entertainment. Since those brands are associated with media products, that would make sense.
There is another, more troubling explanation. Wal-Mart is the country’s largest seller of DVDs. It should have some foothold in selling video online. Obviously, that has not worked.
Wal-Mart’s move may be the earliest indication that offering video online is not a viable business yet. And, that is bad news for the companies still in the business.
Douglas A. McIntyre
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