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Wal-Mart’s entry into the film download market, as the first retailer to secure agreements with Hollywood’s six largest studios, will be the first of a string of such deals, analysts have predicted.
The world’s largest grocer, which accounts for 40 per cent of DVD sales in the United States, is offering Americans more than 3,000 films and television episodes from a trial online store.
New releases from Walt Disney, Warner Brothers, Paramount, Sony, 20th Century Fox and Universal will be sold online for up to $19.88 (£10), in line with Wal-Mart’s retail DVD prices. Downloads will be available on the same date as the films are released on disc.
Hollywood, facing slowing DVD sales, has been eager to tap the web’s potential but it remains nervous of online piracy and of alienating the large DVD retailers, which account for as much as half of a blockbuster’s revenues.
Adam Daum, an analyst for Gartner, said: “The studios have been reluctant to promote downloads without the blessing of the retailers. Wal-Mart’s move has now given them free reign.”
However, the appeal of Wal-Mart’s service could be limited as it will not link with televisions and will show films only on PCs that run on Microsoft’s XP and Vista operating systems.
“If films are restricted to PCs and can’t be watched on larger screens, the floodgates are opened in terms of deals — but not mass market consumption,” Mr Daum said.
Wal-Mart will enjoy a price advantage against most rivals, selling its cheapest titles at $7.50, compared with the equivalent $9.99 charged by Apple’s iTunes service. However, a bid to undercut Apple has already proved unsuccessful for Wal-Mart in the digital music market. The group will hope that concerns over usability will be offset by its back-catalogue advantage and its ability to offer a “longer tail” of less popular titles. ITunes, which can be linked to a televi-sion, carries only films from Disney and Viacom’s Paramount Studios, while Amazon’s “Unbox” service does not offer titles from Disney.
Blockbuster, the DVD rental specialist, is understood to be planning a new online download service. British groups such as Tesco, which has made a success of selling DVDs, could follow in Wal-Mart’s footsteps, analysts said.
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