Target Joins Walmart with iTunes Concerns

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif (http://www.macrumors.com)

Target has joined Wal-Mart (http://today.reuters.com/news/articlenews.aspx?type=internetNews&storyID=2006-10-09T181443Z_01_N09273960_RTRUKOC_0_US-RETAIL-TARGET-LETTER.xml&WTmodLoc=InternetNewsHome_C2_internetNews-2) in cautioning major movie studies that digital movies could hurt retail DVD sales.

Target's letter from President Gregg Steinhafel noted that movie studio downloads were less expensive than DVDs, according to the newspaper. The letter also said that if the pricing did not become more equitable, Target would reconsider its investment in the DVD business, the paper said.

Wal-Mart was recently cited (http://www.macrumors.com/pages/2006/09/20060922134714.shtml) as warning Movie Studios that there could be consequences if more movie studies joined in digital movie distribution alongside Disney.

Disney's Present of Home Entertainment has reportedly met with Target executives to stress that digital distribution remains a small market.

[FF_productions]

Ah shut up you bastards...

[evilgEEk]

I thought Wal-Mart denied these claims?

[alec]

Sounds like bad news for Apple. Increased outside pressure from major retailers of DVDs is turning into the less likelihood of other studios signing on to iTunes... unless of course consumers get the wonderful opportunity to pay $24.99 to watch the latest Tim Allen release.

[PharmD]

I'm ashamed I work for them. I've always considered Target the "good guys" Wal-mart but the more I get a taste for their corporate side (retail as well as pharmacy) I'm less impressed day by day.

[Durendal]

This is a load. Downloads will barely make a dent in DVD sales, especially when you can take the DVD home and rip it yourself. Most people don't have massive broadband pipes and they want a physical copy they can pop into the DVD player at home. Joe Noob may not know how to rip the disc, but I doubt he'll buy a movie online if he can't watch it on his DVD player. He might buy a movie to watch on his iPod that he already has in his DVD collection, though. Target and Hole-in-the-Wal-Mart are whining about nothing. Downloads may one day start chipping away at hardcopy sales, but it's going to be years before it starts to make a difference.

[greendragon]

Ah shut up you bastards...

walmart, target, YOU SUCK!!!

[runplaysleeprun]

Disney's Present of Home Entertainment....

Disney's President perhaps?

[darwen]

When will these companies stop bitching over this! I shop at Target all the time for DVDs, iTunes selling those movies is not going to change this. If I want the DVD, I will buy the DVD. Seriously, this is like them complaining over Pay Per View or Rental stores. Get over yourself! This is corporate America... monopolies are not going to be supported by the masses. Competition is a good thing. These companies need to start putting the consumer first and themselves second.

[nostaws]

Of course they are less expensive. No packaging, no media, no store space, no shipping required.

They should be less expensive.

If they were the same price this would be a serious problem. I still have a problem at the outrageous prices of CDs and DVDs because they are more expnsive than cassettes were, but cheaper to produce. It is all about greed and $$.

Apple wants to make money too. but they eliminated some considerable costs.

[evilgEEk]

I shop at Target all the time for DVDs, iTunes selling those movies is not going to change this.
Maybe not for you, but it will for me, and probably a lot of other folks as well.

Once I have a decent method of getting my movies from my computer to my TV (i.e. iTV), and iTunes has more selection, I plan on never buying another DVD again. I'm in the minority here I'm sure, but for how long? How long before digital distribution is the method of choice for your average Joe?

My point is that their (Wal-Mart/Target) concerns are valid, but they're still just whining about it because they're scared of competition. Why isn't Wal-Mart whining and complaining about the Music Store? Oh... That's right, because they have one of their own. :rolleyes:

[ziwi]

Makes one wonder what the markup on the DVDs are at the 'discount' stores...I am sure that they do not get the same profit from an iTunes card as the movie so it is just about $$$ as everything is.

[Swarmlord]

Of course they are less expensive. No packaging, no media, no store space, no shipping required.

They should be less expensive.

If they were the same price this would be a serious problem. I still have a problem at the outrageous prices of CDs and DVDs because they are more expnsive than cassettes were, but cheaper to produce. It is all about greed and $$.

Apple wants to make money too. but they eliminated some considerable costs.

I knew if I scrolled down far enough I'd find someone that had already said exactly what I would have posted on this subject.

[zap2]

If true, this is bad...Apple needs to get people who make movies on board, with pressure from Walmart and Target, movies companys might not come over as quickly, and they really are selling well from what Disney says!

[dgriffiths]

..if Apple doesn't promise to not kick Target out of the DVD sales business, Target will leave the DVD sales business?

I can hardly imagine the terror that must be echoing through the halls of the Disney headquarters. Don't tell their biggest shareholder - he'll be mightily ticked off.

[sartinsauce]

Once I have a decent method of getting my movies from my computer to my TV (i.e. iTV), and iTunes has more selection, I plan on never buying another DVD again. I'm in the minority here I'm sure, but for how long? How long before digital distribution is the method of choice for your average Joe?


I agree, except for one little thing===> HD Content distribution. No real solution for that one yet. You can't very easily d/l a 25GB HD movie. Even compressed, it's a massive freakin' file. I don't think there's a comsumer level internet connection that could support such content offerings.

So where does that leave us? We'll be able to d/l SD movies & TV. Brick and Mortar retailers can continue to sell hard copies with special features and HD DVD/Blu-Ray discs as well. Any retailer worth their weight in liquid soap will markup premium content and delivery formats, and everything will work out fine, until the next big change or trend.

I must agree with everyone who is in essence saying: "I'll download, stream to the TV, and if I need higher quality, special features or a hard copy, I'll stumble to the store (or online retailer) and but the disc.

I don't see how these delivery methods can't work hand in hand.

[iMikeT]

"Change" is always a hard thing for people to accept...:rolleyes:

[ChrisA]

Just what can Target say? "If you allow Apple do do something that might cut into out DVD sales we will intentionally sell fewer DVD" Kind of like holding a gun to your head threatening to shoot.

[evilgEEk]

I agree, except for one little thing===> HD Content distribution. No real solution for that one yet. You can't very easily d/l a 25GB HD movie. Even compressed, it's a massive freakin' file. I don't think there's a comsumer level internet connection that could support such content offerings.
I agree, but I don't have an HD TV, nor do I plan on having one any time soon, so I'm not too concerned about HD content yet. ;) But others definitely will be.

Just what can Target say? "If you allow Apple do do something that might cut into out DVD sales we will intentionally sell fewer DVD" Kind of like holding a gun to your head threatening to shoot.
I love it! :D

[calculus]

It's funny how the capitalists are all for a free market...until it starts working against them.

[mechamac]

Eeeeeeyep, Target is just gonna stop selling DVDs if they don't get their way. Uh huh. Ridiculous.

[ChrisA]

I agree, except for one little thing===> HD Content distribution. No real solution for that one yet.

If you can watch an HD movie over your satilite or cable system then somehow the cable or stilite company found a way to electronically distribute the HD content to you. That 25GB of data found a way to get into your house. Not only did it get into the huse but it did it in real time

[BRLawyer]

It's funny how the capitalists are all for a free market...until it starts working against them.

Ah, the U.S. are specialists at that...a.k.a. "you have to open, but I don't"...:rolleyes:

[Earendil]

Just what can Target say? "If you allow Apple do do something that might cut into out DVD sales we will intentionally sell fewer DVD" Kind of like holding a gun to your head threatening to shoot.

Well, the idea being that if Wal-mart (reported to be selling 40% of all DVDs in the US) and Target suddenly pull out of the DVD business, that would be a 40+% hit in DVD revenue, to which I don't think Apple could possibly pick up, nor would all those people go to Apple.

Now you say that people will just shop elsewhere, but that isn't going to be true either. Many people buy DVDs on either impulse or because they are cheap. Not everyone who would buy a DVD at Wal-Mart will suddenly be willing to another shop and pay $5 more.

Now, Wal-Mart and Target won't pull everything at once, so I'm not sure exactly what they could do. But anything they do WILL be felt by the movie industry in the short run at least.

And to those that say Apple won't put a dent in retail sales, you're wrong :)
Maybe not this month, maybe not this year. But in a 100 years we will be downloading all our entertainment, which means that sometime between now and then SOMEONE is going to take over that distribution. If Wal-Mart is in no position to make that move to online, than they have to stall those that are as much as possible until they are able to get in the game.

btw- how can Wal-mart make this claim about iTunes robbing retail when they themselves have an online music store. I'm not sure why a parallel can't be drawn between music and movies...

[brepublican]

Eeeeeeyep, Target is just gonna stop selling DVDs if they don't get their way. Uh huh. Ridiculous.
Ditto.

Stop being retards and let the free market do what it do. Last time I checked, we had a capitalist society

[Rocketman]

Online delivery is lower price than the physical artifact because it COSTS LESS. Interestingly the net $ to the publisher is HIGHER with online despite the fact target and Wal-Mart sell at loss leader prices.

These facts means future CD/DVD artifact sales will be slight premium propositions and will of course remain valid for a long time.

BUT online sales should not only take a big market share, but ADD customers from people which are convenience oriented or physically away from a big box retailer.

Besides it is inevitable.

Rocketman

[kentrox99]

Am I the only one that feels like we've heard this song and dance before??
Isn't it the same stuff we heard from the record companies and music stores when people started downloading music? You can't stop a technological shift just because you want to keep the same profits. Let Wally-World and Target threaten all they want. It's not going to stop anything.

[aricher]

If you can watch an HD movie over your satilite or cable system then somehow the cable or stilite company found a way to electronically distribute the HD content to you. That 25GB of data found a way to get into your house. Not only did it get into the huse but it did it in real time

Exactly - I watch HD content and HD on-demand nearly every day in my house. if my crappy cable provider can deliver this nearly any mega-corp can.

[omahajim]

It's funny how the capitalists are all for a free market...until it starts working against them.
DING DING DING we have a winner.

Yeah, downloads 'might' be less expensive to sell, because you have no B&M store, no packaging, no shipping, etc etc. But downloads have their costs too: servers (lots of them), bandwidth (lots of it), etc etc. Totally different delivery mechanisms, but doesn't automatically mean that one is cheaper than the other to 'deliver'.

Target and Wal-Mart and other big box stores occasionally fight small communities for the free market 'right' to open a store. But they bitch and moan when someone new sells a similar product in a new and innovative way.

Should work both ways, guys - an equal market is an equal market. Unless you want competitors to be less 'equal' than you. (not very eloquent, but you get the drift).

There is a brand new Target open just a couple miles from me... that I haven't been tempted yet to step foot into. Target's stance on this issue seals the deal... I won't be venturing into that shiny brand new store.

[nbs2]

It's funny how the capitalists are all for a free market...until it starts working against them.
Before I comment on the story - this is the free market in play. This appears to be a business dispute, not governmental involvement. The free market requires communication between businesses to maximize profits.

As for Target - this doesn't surprise me. No matter what people say about Wal-Mart, the WM return and service policy is golden. With Target, we got nothing but crap over our attempt to return a $17 sandwich maker that we got as a wedding present, but didn't need. WM doesn't carry it, otherwise we would have returned it there. Instead, T has determined that I must return it to them for an e-certificate (where they will deduct the cost of shipping - $7, I believe) that I can use to buy any item from their on-line store (plus shipping - about $7), netting me a gift of $3.

Worst. Service. Ever.

[chukronos]

Once I have a decent method of getting my movies from my computer to my TV (i.e. iTV), and iTunes has more selection, I plan on never buying another DVD again. I'm in the minority here I'm sure, but for how long?

Not too long. Movie downloading will be just like music downloading in the next 5 years. This is just the beginning. I understand the big company's complaints.
-Chuck

[BenRoethig]

I don't think they have anything to fear for quite a while. iTunes movies downloads are the digital equivalent to UMD. It's cool for Apple to be able to sell a movie for your iPod, but I don't see the practical use yet. You can't watch it on your T.V. (without spending $300 on Apple's upcoming iTV), you can't burn it to DVD, watching it full screen on a Mac or PC is not going to be as crisp as on a T.V., and the extra features aren't there. Quite frankly really who wants to hold an iPod for 2-3 hours to watch a movie anyway? Apple is going to have to offer something more useful for this to really catch on.

[iJaz]

I agree, except for one little thing===> HD Content distribution. No real solution for that one yet. You can't very easily d/l a 25GB HD movie. Even compressed, it's a massive freakin' file. I don't think there's a comsumer level internet connection that could support such content offerings.


Faster internet connections will come, I have 24 Mbit/s, not unusual here in Sweden. Of course Target is looking at this as a threat in the future, not right now.

[granex]

Just what can Target say? "If you allow Apple do do something that might cut into out DVD sales we will intentionally sell fewer DVD" Kind of like holding a gun to your head threatening to shoot.

All we need now is the Target chairman slowly driving around Cupertino in a white Bronco with 200 police cars tailing him.

[c2edgerton]

Maybe it's just me, (and maybe this has been said before) but when I first got my "video capable" iPod, I was downloading music videos left and right. Then as soon as TV shows became available I got hooked on "Lost", "Battlestar Galactica" and more...but I quickly found out that the quality was not that great...

I still ended up buying the DVD's of the shows that I really liked, and for those movies that I want on my iPod (for travel purposes) I simply convert them to iPod format, the quality is far better than anything you can download.

Downloading may be convenient, but I will still run to the store for a hardcopy.

And I agree with some earlier comments, once the HD/Blu-Ray war is over and the dust settles, I will begin rebuilding my video library with the winning format, because I can't imagine (yet) trying to download those files.

[BenRoethig]

Maybe it's just me, (and maybe this has been said before) but when I first got my "video capable" iPod, I was downloading music videos left and right. Then as soon as TV shows became available I got hooked on "Lost", "Battlestar Galactica" and more...but I quickly found out that the quality was not that great...

I still ended up buying the DVD's of the shows that I really liked, and for those movies that I want on my iPod (for travel purposes) I simply convert them to iPod format, the quality is far better than anything you can download.

Downloading may be convenient, but I will still run to the store for a hardcopy.

And I agree with some earlier comments, once the HD/Blu-Ray war is over and the dust settles, I will begin rebuilding my video library with the winning format, because I can't imagine (yet) trying to download those files.

You're far from alone.

[DIGIJUNKIE]

Studio heads are no dummies, they want to make money too and they know that the future of media is through the computers. This is just all PR crap to keep the Wall-mart and Target happy for now.
Wall-mart and Target will either live with it, or loose huge profits they can still make if they do what they say they'll do and dump all dvd's.

Don't play chicken with a tank if you are driving a motorcycle, not a very good outcome.

[pyramid6]

I bought a season of a TV show on iTunes for $25 or so. I saw the same season at Walmart for $45 or so. I'm just sayin'.

[NewSc2]

hm, wait, people don't already download movies??

**hides torrents**

[eyehop]

It's a shame, poor Walmart and Target have to deal with shifts to the economy and distribution, much like the tens of thousands of US workers who have lost jobs due to overseas redistribution, etc., then end up working at their stores for a 1/4 of what they used to make. Digital distribution is a matter of fact they'll just need to adapt to. Play them an iTunes file of a violin. The good news is they still have toilet paper, which I don't see moving to an on-demand system anytime soon.

[bdj21ya]

Just what can Target say? "If you allow Apple do do something that might cut into out DVD sales we will intentionally sell fewer DVD" Kind of like holding a gun to your head threatening to shoot.

Good analogy, except it's also like the guy holding the gun to his own head is worth millions of dollars to the person he's making the threat to (the threat to shoot himself). So the person he's making the threat to has to ask, is this guy rational, or no? If not, maybe it would be best to placate him. However, if you think he's going to act in his own self interest, call his bluff.

I doubt Target would go through with any kind of threat, since it only makes sense to retaliate if you think it will affect future behavior (hurting yourself once may be worth it if it's going to make your future threats more believable). Ahh, I love game theory. But what future behavior is Target going to care about affecting? Do they foresee several similar battles with the movie studios that might turn their way if they carried out this threat?

[Rodimus Prime]

What is the difference in price on the movies sold on iTunes compared buying the DVD itself?

If it is like 5-10% (1-2 bucks) I dont see why they are complaining but if the the defferences is $5+ I can understand why target is complaining and the threat is a good threat. It is not fair to have that large of a difference in cost.

I might like to add that places that sell the DVD are only making 2-3 bucks on the DVD they sell.

[dmelgar]

And I thought that Target was better than Walmart. That's a sign that these companies have too much power. They want to protect their monopolistic power over DVD sales. Its ludicrous that Target and Walmart should be able to coerce the movie studios and Apple in such a way.

[psycoswimmer]

Wow. Can't everyone leave Apple alone. ;)

Currently, online movie downloads have no what near the popularity as going out and buying a real DVD has. Greedy Target and Wal-mart. Don't the movie studios see that Target and Wal-mart and other retail stores will still sell DVDs, or they will take a loss?

[e28]

If you can watch an HD movie over your satilite or cable system then somehow the cable or stilite company found a way to electronically distribute the HD content to you. That 25GB of data found a way to get into your house. Not only did it get into the huse but it did it in real time

This is quite different from on-demand hd download. Cable and satellite bandwidth is much greater than traditional internet and it's multicast.

However, for a 25GB movie you only need about a 4 MBPS to stream it (that is, start watching as soon as you start downloading). Most 5-6 MBPS dsl packages are available now for $35/mo, so it doesn't seem that far off.

I think Wal-mart wanted cheaper dvd prices to be more competitive with Target and now Target is trying to get the same treatment. The winning solution is that the studios will probably allow Wal-mart and Target to sell downloadable movies, too, and everyone will be happy except for Wal-mart who will still want cheaper dvd prices.

Truth is, the downloads are less than dvd quality, don't have extras, you need broadband internet and a fast computer or an iPod, and you can't wrap them up and give them as gifts. DVD's will continue to sell well even at a higher price (especially at Wal-mart and Target).

[Foggy]

DVD's are obviously pretty profitable or they wouldnt bother selling them, so what they are saying is if the movie companies let Apple sell movies they are gonna cut off their noses to spite their face and pull a really profitable sales line? I dont think so - ********* idiots.

[Hobofuzz]

I registered just so I could respond to this thing..

I'm getting really sick of companies that complain whenever they're met with competition. They love capitalism until it's working against them. Target and Wal*Mart are acting like little children who don't get their way.

Under the Sherman Act, what Target and Wal*Mart are doing falls under the category of antitrust. Attempting to manipulate the market through the use of contracts and threats aimed towards hurting competitors is defined as antitrust. If Target and Wal*Mart go along with this, a class-action lawsuit can be filed against them for forcing us to pay their prices for DVDs without a lower-priced alternative.

Target and Wal*Mart could easily compete with Apple's movie store, even without lowering prices.

Grow up Target. This isn't a communist nation, we have a little something called Capitalism that's basically social darwinism: Compete or shut up.

Simple solution for Wal*Mart: You know that little online music store you have? Why not add movies to it? You have enough money!

[pyramid6]

Walmart:
http://www.walmart.com/catalog/product.do?product_id=5147600
Target:
http://www.target.com/gp/detail.html/sr=8-24/qid=1160429340/ref=sr_8_24/602-3051215-3759835?%5Fencoding=UTF8&asin=B00005JNS0
iTunes:
Not sure how to link, but it is $12.99

I'm just sayin'.

[IEatApples]

Ah shut up you bastards...
That's right! They need to:

http://www.youtube.com/watch?v=AOH_e3YUprQ

:D :D :D

[bill4588]

i dont know why walmart and target are making a fuss about the online movie store. they're like "it's going to cut into our sales!! waaaahhhhhh!!" they need to shut up. it's like they don't understand competitive advantage.

[twoodcc]

Ah shut up you bastards...

well that's one way to put it :p

but i agree.

[pianojoe]

Of course they are less expensive. No packaging, no media, no store space, no shipping required.

They should be less expensive.


I don't understand what this fuzz is about! I buy a DVD, I watch it, say, 10 times. (Some criminally inclined people would even rip it, shame!) If I don't want it any more, I'll resell it for maybe half the price on Eballs.

I can't resell the downloaded version. The resale value of the purchased media drops to $0 the moment I buy it. That means, it should be half the price of a DVD. But wait... No packaging, no physical media, (in a way) no retail profit margin...

The download should be one third the price of the DVD. That's fair!

[madmax_2069]

i don't know why wally world and target are complaining, this will not hurt DVD sales. like what was said. there are allot of people that cant afford new Mac's to play there movies (my problem). or live outside of the city and don't have a high speed connection (cause they are to far out) or just cant afford satellite internet. i like to have the original copy (in dvd format) i know allot of other people that also like to have a dvd of the movie.


boy are they stupid (wall-marts and target) in not seeing this.

[stainlessliquid]

This is stupid. Neither walmart or target are going to stop selling DVD's just like they havent stopped selling cd's. The absolute crap quality of the movies and the horrible lagging movie player that iTunes offers is completely irrelevant to DVD sales. Even bittorrent movies are better. iTunes movie downloads are not a threat to DVD's by any stretch of the imagination since the execution of the movies and movie player was so poor.

Its a baseless threat that they have no intention of following through with because theyd lose far more money than sales lost to iTunes.

[ITR 81]

DVD's are obviously pretty profitable or they wouldnt bother selling them, so what they are saying is if the movie companies let Apple sell movies they are gonna cut off their noses to spite their face and pull a really profitable sales line? I dont think so - ********* idiots.
Actually not really. I use to sell them in my store.
I'm sure they get a better deal then us but not that much better.

Normal DVD retail is like this.
DVD normal sells $24.95
DVD wholesale would be around $19.95
If I bought a case I would get them for $16.95.

This doesn't help when Best Buy and Target and Wal-Mart sell them at 19.95 for the very first week! I'm lucky if I make 5 bucks on DVD sales...then factor in shipping costs of the DVD's.

Selling DVD's is like selling comic books...you have to sell massive amounts of them to make any kind of money.

I figure Target and Wal-Mart make around 3-5 bucks on each DVD they sell.
Some folks ask us to match Wal-Marts and Targets and Best Buy pricing...but we can't normally. We can't even make any money of them now.

I once had a DVD for sale. It was priced at 24.95. I paid 19.95 for it. I marked it down to 20.95..to move it. Guy comes in to tell me Best Buy sells the same DVD for 14.99!

[akhomerun]

gee, the retail stores would speak out against something that would hurt their sales, wouldn't they?

apple is providing an alternative just like retail stores provided alternatives to going out to a theater when VHS was released. im certainly not saying it's better, i would never download an itunes movie, because i'd rather have a physical dvd. but now i have the choice.

[balamw]

The resale value of the purchased media drops to $0 the moment I buy it.
I generally agree with your thesis, restricted downloads should be a lot cheaper than new DVDs.

However, I believe that, for the most part, the market for used DVDs has dried up. I was doing pretty well buying movies and reselling them after I watched them (sort of Netflix w/o the subscription or deadlines) but now many of the movies I want to get rid of are often available for $2 + s/h on Amazon. So the only DVDs that sell for a decent price are rare or almost new movies...

Plenty of new DVDs of older movies for $10 or less at your local Target or Wally World.

B

[Steve Jobless]

maybe if target dropped their pricing they wouldnt have this problem

[balamw]

maybe if target dropped their pricing they wouldnt have this problem
As ITR 81 already mentioned, they are already often selling at below their cost to attract customers. They don't have any room to go lower unless the studios drop their prices.

B

[tarkeybear]

I am a major Apple fan-boy but I haven't bought movies from iTunes for a couple reasons.
1) I like the special features on DVDs, and I doubt apple is offering alternate soundtracks, subtitles, director's comments, etc. with the Apple movie offerings.
2) My daughters like taking a DVD with them to their grandparents house. Unless we centralize Apple downloaded movies at my house and equip my kids with video iPods, the Apple movie sale solution is not a very portable option.

Don't get me wrong, one day I'll probably buy a movie from Apple, but at this time, I'll pay a $5-$10 premium for portability.
I do buy TV shows from iTunes, but I don't expect extra features with TV shows.

As other posters have have suggested, even if "Johnny Lunch-Pail" isn't interested in the benefits in physical media I list above, he probably won't have the bandwidth to download the movies at any reasonable speed. How much time does it take to save $5?
"Instant gratification" of iTunes movies is going to be painfully slow on most peeps DSL.

I'm surprised the folks at Target and Walmart haven't figured this out. Maybe the execs making all the fuss assume that their shoppers have the same high-end systems that they have?

I would assume any impact to DVD sales will be incremental, and T&W should be able to adjust their business model to this, adjusting retail space accordingly.

[nbs2]

I'm getting really sick of companies that complain whenever they're met with competition. They love capitalism until it's working against them. Target and Wal*Mart are acting like little children who don't get their way.

Under the Sherman Act, what Target and Wal*Mart are doing falls under the category of antitrust. Attempting to manipulate the market through the use of contracts and threats aimed towards hurting competitors is defined as antitrust. If Target and Wal*Mart go along with this, a class-action lawsuit can be filed against them for forcing us to pay their prices for DVDs without a lower-priced alternative.
Since people seem to have missed my earlier point when the claim was the failure of the free market:

this is the market in play. This appears to be a business dispute, not governmental involvement. The free market requires communication between businesses to maximize profits.

As for the Sherman, the Act was designed to protect consumers from the leveraging of monopoly power to conspire to control a market. Here, there is no conspiracy to control the market. Rather, there is a complaint by one business entity regarding the activities of another with which it does business. If Target and Wal-mart were conspiring to split the market (or if the industry conspired with T and WM), that would trigger the Sherman.

Grow up local mom and pop store. This isn't a communist nation, we have a little something called Capitalism that's basically social darwinism: Compete or shut up.[emphasis added]

[babyj]

Target, Wal Mart and everyone else will continue to sell dvds and cds as long as they are making money from them. When they don't make any money from them they'll stop selling them and not before.

At the moment they are moaning about online distribution to get better prices from their suppliers, so they can lower their prices and / or make more profit from them. They'll also have their own download services as well when and where they can, provided they make money from them as well.

I can't believe either of them have or would threaten movie companies, especially as it won't get them anywhere - there is no way a movie company would say no to online distribution just because they told them to.

The cd / dvd market is no different to anything else that Target and Wal Mart sell, they will be using similar arguments with all of their suppliers all of the time. The only difference is that it ain't a story when its about vacuum cleaners, dairy products or kitchen cleaning products.

[Rodimus Prime]

As ITR 81 already mentioned, they are already often selling at below their cost to attract customers. They don't have any room to go lower unless the studios drop their prices.

B


this is something that needs to be pointed out again. The complaint that Target has is the fact that the online download price is well below the cost it would be for them. You have to remember when they sell a DVD they only make 1-2 bucks off of it. Right now the stuff on iTunes is below what it cost them to get it and apple is making money off of it. Not losing it like Target is.

They are telling the studios they want to be able to buy the DVDs from them at a more competive price. If they do not get their way they will reduce the amount of shelf space for the DVD and reduce the amount they sell because of that. Net result is the studios lose more money.

[SMM]

It's funny how the capitalists are all for a free market...until it starts working against them.

Beautiful! I wish I had said that. Do you mind if I quote you?

A person can buy DVD's almost everywhere. They do not need either of these creep shows. I doubt if I have spent a total of $100 combined between them. Wal-Mart (especially) just gives me a totally negative feeling. I will not spend my hard-earned there, regardless of what their prices are.

[darwen]

Maybe not for you, but it will for me, and probably a lot of other folks as well.

Once I have a decent method of getting my movies from my computer to my TV (i.e. iTV), and iTunes has more selection, I plan on never buying another DVD again. I'm in the minority here I'm sure, but for how long? How long before digital distribution is the method of choice for your average Joe?

My point is that their (Wal-Mart/Target) concerns are valid, but they're still just whining about it because they're scared of competition. Why isn't Wal-Mart whining and complaining about the Music Store? Oh... That's right, because they have one of their own. :rolleyes:

Ok, point taken. You do agree with me that they are whining though. I do not believe that there will be a large market of people that stop buying DVDs because they can now download them. Maybe there will be, it just does not make sense to me.

[yg17]

I'm ashamed I work for them. I've always considered Target the "good guys" Wal-mart but the more I get a taste for their corporate side (retail as well as pharmacy) I'm less impressed day by day.


I'm sorry.


I worked at that hellhole for 3 and a half years and it went towards the crapper with each passing day. I went on leave of absence for school, but didn't come back over the summer due to me having an internship elsewhere, and they sent me a letter telling me to either quit or come back, so I said goodbye.


Their business practices, while better than Wal-Mart, are nothing to be proud about either. Maybe if they spent more time improving the shopping experience and less time high pressuring customers, err, guests, for those god damn target visa cards, loss of DVD sales wouldn't be a problem

[willdenow]

In fact, DVD pricing is not the most important factor for Walmart and I suspect Target as well. Both companies employ sophisticated marketing techniques to draw customers into the store and get them to part with more money than they originally intended to spend. Brand-name promotions, item placements and even Walmart's "don't ask, don't tell" return policies are examples. The use of loss-leaders, selling products at a small loss, has proven to be one of the most powerful customer draws. DVDs are the numero-uno loss leader draw of most Walmarts, particularly those in the broad midsection of the country where it's often difficult to find a video rental store, much less a Tower, Borders or Virgin Atlantic store. I recently spent the summer in the Hill Country of Texas and became quite familiar with the Friday evening surge when customers would stream into a Walmart to pick up a DVD for the weekend and then decide to do a little additional shopping "seein' as they was there." I think the stores are rightfully fearful of the loss in foot traffic and the consequential loss of impulse purchases if movie downloads become popular. For the same reason, simply openning up an online store will not insulate them from losses since the profits accrued from DVD sales don't generally arise from the DVDs themselves, but from the additional shopping that is all but inevitable once you enter the store.

[JONNYCHO]

I was watching AOTS (Attack of The Show) and they said in the next 5 years DVD sales will go down because of movies on demand on cable, and online. I think so too.

[Flynnstone]

Corporate self centered whiners!
Apple and iTunes changing the scene?
How about Walmart changing the scene. Now Tower is pushing up daisies.

[Steve Jobless]

As ITR 81 already mentioned, they are already often selling at below their cost to attract customers. They don't have any room to go lower unless the studios drop their prices.

B
thats true and I agree, however best buy often offers much lower prices, which attracts me to them, hell I'm a loyal customer regardless of how crappy of a company it may be.

[jbembe]

In fact, DVD pricing is not the most important factor for Walmart and I suspect Target as well. Both companies employ sophisticated marketing techniques to draw customers into the store and get them to part with more money than they originally intended to spend. Brand-name promotions, item placements and even Walmart's "don't ask, don't tell" return policies are examples. The use of loss-leaders, selling products at a small loss, has proven to be one of the most powerful customer draws. DVDs are the numero-uno loss leader draw of most Walmarts, particularly those in the broad midsection of the country where it's often difficult to find a video rental store, much less a Tower, Borders or Virgin Atlantic store. I recently spent the summer in the Hill Country of Texas and became quite familiar with the Friday evening surge when customers would stream into a Walmart to pick up a DVD for the weekend and then decide to do a little additional shopping "seein' as they was there." I think the stores are rightfully fearful of the loss in foot traffic and the consequential loss of impulse purchases if movie downloads become popular. For the same reason, simply openning up an online store will not insulate them from losses since the profits accrued from DVD sales don't generally arise from the DVDs themselves, but from the additional shopping that is all but inevitable once you enter the store.

Yep, it's similar in Best Buy and other places with the weeks newest CD releases. Normally a few CDs are on a really good sale and others are not so competitively priced. Good thing I can control my impulses... for the most part.

Anyway, unlike my CD collection, I would be quite happy with a terrabyte unit to store all of my movies so I could just scroll through some list on the remote and playback any given movie for the evening-- or download something new. When the iService gives that to us, it will be quite nice.

[bretm]

Wow. And travel agents are going to keep us from buying plane tickets online. More recently real estate agents aren't happy with online real estate brokering. Go figure. Instead of innovating and finding ways to adapt, they just complain and threaten. If they're not careful, they'll go the way of the travel agent...

[balamw]

thats true and I agree, however best buy often offers much lower prices, which attracts me to them, hell I'm a loyal customer regardless of how crappy of a company it may be.
Who am I to mess up their business model? I often make a Tuesday trip to my local BB to pick up new releases, but it's not always true that BB beats Target's prices. If I'm shopping for a new release I'll usually check both places, Costco & Amazon and get it from the place with the lowest price or nicest "extra". My kids have received lots of "freebies" along with DVDs at Best Buy or Costco...

B

[steelfist]

aw, crybaby, you are going to lose buisness aren't you? don't worry, there's always HD-DVD and Blueray movies coming out. these people just can't accept the fact that there's a new method, downloading legaly online, that's going to be a big hit. cry all you want. wah wah wah

[invalidname]

I also understand these new "auto mobiles" are going to cut into buggy whip sales. That's just wrong.

[2ndPath]

Technology is evolving all the time. And if movies are not offered for sale via download, there will be just more people downloading movies from filesharing networks without any profit for the movie companies. Certainly a part of the legal dowload business would go to companies like Wall Mart or Target, but on the bottom line the profit will be smaller for the movie companies because of more illegal downloads.

The same thing happened with music before and it was seen that many of the people using illegal download networks were also satified with a reasonable legal download service. Many people just wanted the comfort of not having to drive to a store to pick up a CD.

[Ladybug]

For years WalMart has moved into many small towns, and undercut everyones prices repeatedly, driving all the Mom & Pop stores out of business. As long as they were hurting someone elses bottom line, they seemed to think that this was competition and very much acceptable.

Now that Apple wants a piece of the pie, its suddenly unfair. Sorry WalMart, either get in the game or find something new that works for you. No sympathy from me. :(

[Counter]

Digital distribution of movies isn't going to put any sizeable dent in dvd sales for a long time. If ever at the current prices, which I extremely doubt will be reduced.

[asphalt-proof]

For those of you saying that we live in a capitalistic society... not by a long shot. Corporate welfare is MUCH MUCH bigger than any fictional welfare queen in Brooklyn. These companies receive tax cuts, loopholes, exemptions far beyond what a middle class suburban couple has access to.

What Target and Walmart are doing is actually against some of the monopoly legistation that was passed in the early 20th century. One of the tenets was that a company coulodn't tell another producer who they could sell to, at what price, etc. This prevented a very large company from gaining to much of an advantage over their competitors.

What Target and Walmart are probably threatening is to just jack up the prices on the DVDs a couple of dollars. This improves their bottom line and reduces the number of impluse buys a consumer makes on a DVD. Or to not put DVD on encaps, in front of the stores next to the checkout. They really do have a myriad of ways of making the studios lose some profit. At tsome point though, the retailers are going to shaft themselves. It really is a game of chicken and the first one to blink, gets the bullet in the head (how's that for mixed metaphors?)

[lazyrighteye]

Who rates this negative?
Unless I misread the report, basically all Target did was remind the studios that the DVD format is in jeopardy and they better get with the times or Target will. And if studios need Target and Wal-Mart to tell them that, they're in more trouble than I ever thought.

Assuming that studio execs have 1/2 a brain, then they must be well aware that the DVD format is obsolete. They must also recognize that digital distribution directly to computers (or TVs), is the one of the next delivery methods. Now, assuming they know this, they sure are doing a lousy job of offering us alternatives. Problem is, Hollywood's had it too good for too long. Complacency breeds laziness. Adapt or die. And it sounds like Target intends to adapt.

That said, the underlining message here is that (like it or not) companies like Apple are driving the distribution bus. We're witnessing a changing of the guard, so to speak. Which is the reason I rate this "rumor" a positive.

Now if we could just get the same kind of revolution in the mobile phone market...

[Earendil]

Who rates this negative?
Unless I misread the report, basically all Target did was remind the studios that the DVD format is in jeopardy and they better get with the times or Target will. And if studios need Target and Wal-Mart to tell them that, they're in more trouble than I ever thought.


My understanding was different. I take it that they are taking the same stance that Wal-Mart is, and that is that if the movie industry allows iTunes to sell movies, they will make the record companies pay for it (in a negative way). The retailers aren't ready to take on iTunes and the online market, so they are going to use their power to stall the transition to digital downloads as long as they possibly can.

What Target is doing is anti Apple, and more importantly, anti the progression of technology and lifestyle.

[bretm]

For those of you saying that we live in a capitalistic society... not by a long shot. Corporate welfare is MUCH MUCH bigger than any fictional welfare queen in Brooklyn. These companies receive tax cuts, loopholes, exemptions far beyond what a middle class suburban couple has access to.

What Target and Walmart are doing is actually against some of the monopoly legistation that was passed in the early 20th century. One of the tenets was that a company coulodn't tell another producer who they could sell to, at what price, etc. This prevented a very large company from gaining to much of an advantage over their competitors.

What Target and Walmart are probably threatening is to just jack up the prices on the DVDs a couple of dollars. This improves their bottom line and reduces the number of impluse buys a consumer makes on a DVD. Or to not put DVD on encaps, in front of the stores next to the checkout. They really do have a myriad of ways of making the studios lose some profit. At tsome point though, the retailers are going to shaft themselves. It really is a game of chicken and the first one to blink, gets the bullet in the head (how's that for mixed metaphors?)

First, no company pays taxes. YOU pay all their taxes. In a capitalistic society it doesn't matter if they are given tax breaks or increases. It is all passed on to the consumer to achieve the bottom line.

You cite it yourself in your misunderstanding that Walmart or Target will just jack up their prices to increase their profit. That's what a company does if your increase their corporate taxes. Decrease them and they can better compete.

Now Walmart and Target jacking up their prices probably wouldn't hurt anyone but Walmart and Target. They may make more per item but obviously they would sell less DVDs. And since they're not in cahoots with each other (THAT would actually be a monopolistic type practice) neither can actually jack the price, because everyone would simply go to Walmart or Target respectively. Or Best Buy, or Curcuit City or whoever. Walmart may be the biggest seller of DVDs, but it they yank them then they won't be. And they won't pull people into their stores to buy stuff they actually make profit on. Another company will glady pickup the slack.

The reason Walmart and Target are all talk is because they have no hand. None. They're backed into a corner. Thier best bet is to open their own online download biz.

This stuff is the same year after year. Companies ride their little economic model for years without looking to the future. Then they complain moan and threaten. If they really had options, they would simply implement them.

[bretm]

My understanding was different. I take it that they are taking the same stance that Wal-Mart is, and that is that if the movie industry allows iTunes to sell movies, they will make the record companies pay for it (in a negative way). The retailers aren't ready to take on iTunes and the online market, so they are going to use their power to stall the transition to digital downloads as long as they possibly can.

What Target is doing is anti Apple, and more importantly, anti the progression of technology and lifestyle.

Yep. It's simply an attempt to buy some time. They know they can't fight it in the end.

[baleensavage]

"If you play with Billy down the street, we're not going to be your friends any more! Nah Nah."
Target and Walmart sound like they are run by bratty jealous kids. Besides, I can't see how movie downloads are going to threaten DVD sales anyway. HBO didn't stop VHS sales. Netflix hasn't stopped DVD sales. Cable on Demand hasn't stopped DVD sales either. People want to buy things. They want to own them. They want something to hold in their hand with pictures and a booklet. Sure people will download TV shows or some movies to watch on their iPods on a commute, but it's not going to kill the DVD market. The only thing likely to kill the DVD market is this bogus format war going on between Sony and Toshiba. Now noone is going to want to buy any HD format because they dont want their purchase to be obsolete next year.

On another note, how is this kind of corporate bullying legal? Doesn't the government actually try to enforce any antitrust laws any more? (rhetoric question)

[Cowinacape]

Ah shut up you bastards...

Would have to pretty much agree with you. Big boxes getting nervous?? To bad! :p

[bketchum]

Rick Aristotle Munarriz, of Motley Fool, has a great response to this story...

http://biz.yahoo.com/fool/061010/116050625611.html?.v=1