Wal-Mart Threatened by iTunes Movies?

[MacRumors]

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

The New York Post reports that Wal-Mart is warning Hollywood studios against partnering with Apple's iTunes Store for movie distribution.

According to studio executives, "Wal-Mart has overtly threatened to retaliate if [studios] go into business with Apple."

While Apple has only signed one movie studio (Disney) to the iTunes store, the early success has caught the attention of other studios. One executive is quoted as saying "We all want to be in the Apple business".

The threat of Wal-Mart repurcussions, however, may temper enthusiasm as Wal-Mart controls a large portion of the retail market for DVDs.

The situation between [Wal-Mart] and Hollywood has gotten so heated and so high-level that Jobs recently phoned Wal-Mart CEO Lee Scott to ask him to moderate his stance, according to a source.

[BrianMojo]

Last I checked this kind of anti-competitive action was illegal under monopoly laws...

[gugy]

ha,
they are just afraid. Well competition is a good thing. they better adapt, if not, that's their problem.
I can careless for Walmart.

[kalisphoenix]

It's about time Wal-Mart gets burned to the ground.

I hope that this pisses off the studios royally. The sooner we shift to a purely electronic method of distribution, the better everything is.

There's no way that Wal-Mart would stop selling DVDs, and what else could they possibly do? Raise prices?

It's retarded. Wal-Mart won't lose any substantial sum of money if iTunes carries movies from all the major houses. But they will lose tons if they stop selling DVDs.

This just seems really foolish to me. They're not in a good position (for once). Granted, it could hurt the studios for a while, but people want to see movies more than they want to shop at Wal-Mart, methinks.

[Rocketman]

I posted in another post on this website this claim some time ago. Wal-Mart uses loss-leading priced CD sales to draw people into the store. BTW that is directly harmful to other brick and morter stores as well as medium priced online retailers. Are they apologizing for that? Considering that iTunes has been in business for YEARS now, have they somehow lost this "increased consumer traffic benefit" as a result of Apple's (#5 in market) success?

Do they see someting we do not see as to Apple's current or future domination of the movie business?

It seems that since Wal-Mart tends to service the very lowest income class in our culture and many of these folks tend to not have computers, and to the extent they do, tend to not have broadband either, it seems there is a degree of mutual exclusivity of markets.

Therefore it seems Wal-Mart is less concerned about the sales themselves as the "benefits" they receive by the physical customer traffic they get from some people going to Wal-Mart to buy intentionally underpriced product so they will shop for other things while there.

BTW Wal-Mart themselves state this, so it is not speculation.

Rocketman

See my really little violin?

[hondaboy945]

Originally Posted by Rocketman

I posted in another post on this website this claim some time ago. Wal-Mart uses loss-leading priced CD sales to draw people into the store. BTW that is directly harmful to other brick and morter stores as well as medium priced online retailers. Are they apologizing for that?

It seems that since Wal-Mart tends to service the very lowest income class in our culture and many of these folks tend to not have computers, and to the extent they do, tend to not have broadband either, it seems there is a degree of mutual exclusivity of markets.

Therefore it seems Wal-Mart is less concerned about the sales themselves as the "benefits" they receive by the physical customer traffic they get from some people going to Wal-Mart to buy intentionally underpriced product so they will shop for other things while there.

BTW Wal-Mart themselves state this, so it is not speculation.

Rocketman

I was wondering how many hillbillies and other country folk have an iPod. maybe Walmart is afraid that even Billy bob wants to download instead of buying from crappy WM.

[kgforce]

Originally Posted by Rocketman

It seems that since Wal-Mart tends to service the very lowest income class in our culture and many of these folks tend to not have computers, and to the extent they do, tend to not have broadband either, it seems there is a degree of mutual exclusivity of markets.

Wow. That's an elitist statement. I think you need to travel around the country and see who really shops at Wal-Mart -- basically every socio-economic group. From poorest to the wealthiest. Even people with broadband!

I would be considered upper-middle class and my family shops there all the time. And we have friends that would be considered wealthy, perhaps even super-wealthy, and they shop there, too.

[wkhahn]

Originally Posted by Rocketman

It seems that since Wal-Mart tends to service the very lowest income class in our culture and many of these folks tend to not have computers, and to the extent they do, tend to not have broadband either, it seems there is a degree of mutual exclusivity of markets.

Therefore it seems Wal-Mart is less concerned about the sales themselves as the "benefits" they receive by the physical customer traffic they get from some people going to Wal-Mart to buy intentionally underpriced product so they will shop for other things while there.

I think there may be a flaw in your reasoning. If wal-mart tended to service the very lowest income class, then how does this class propel such a company to become the biggest retailer of just about any consumable good in this country? Wal-mart targets anyone with a buck to spend and will try to sell them anything to help them part with that dollar, be that an iPod shuffle, DVD or box of peanuts.

As for the foot traffic, I doubt that online music sales has any effect on it. If so, how is Walmart still growing?

edited for grammer

[thewaydownmusic]

Wal-Mart uses loss-leading priced CD sales to draw people into the store.

I work for Target... while we do not always underprice CD's, in many products, that is the case. If someone goes to buy that one product (that the store takes a loss on) the store hopes that they will pick up other items while they are there.

Target sells a lot of the iTunes pre-paid cards... and TONS of iPod accessories.

Wal-Mart... Learn to swim, dude. oh... and Grow Up.
Threats are not what good businesses are built upon...especially if publically known!

The bigger threat would be Apple not letting Wal-Mart sell any iPods. Or maybe Since Apple owns Disney... not letting Wal-Mart sell any Disney, or Disney owned movies.

So... Wal-Mart... Are you going to start threatening Blu-Ray manufacturers... because the demographic that shops wal-mart typically cannot afford things like this. Blu-Ray and online movie distribution are both going to cut into the DVD market share... so... Adapt and survive.

Sink or Swim.

[tk421]

Originally Posted by kalisphoenix

It's retarded. Wal-Mart won't lose any substantial sum of money if iTunes carries movies from all the major houses. But they will lose tons if they stop selling DVDs.

I don't think Wal-Mart makes money on a lot of their DVDs. They sell them at a loss to get people in their stores. If people buy on iTunes, they don't come into Wal-Mart.

[iJon]

Originally Posted by tk421

I don't think Wal-Mart makes money on a lot of their DVDs. They sell them at a loss to get people in their stores. If people buy on iTunes, they don't come into Wal-Mart.

Are you serious? Wal-Mart doesn't put a single thing in their store if it doesn't make them money. With Wal-Mart selling 40% of ALL DVD sales, they are making a nice revenue.

The only thing that they may start doing that doesn't make them much is their new generic drug program, where they are selling over 300 generic drugs at a much deeper discount then leading competitors. Wal-Mart isn't required to report earnings in this field, so who knows how it will go. I'm assuming well.

jon

[SPUY767]

Originally Posted by tk421

I don't think Wal-Mart makes money on a lot of their DVDs. They sell them at a loss to get people in their stores. If people buy on iTunes, they don't come into Wal-Mart.

15+ dollars for a 15 cent disc with 45 cents in packaging around it shipped for about 95 cents. Walmart is making plenty. Wholesale for new DVDs is about 7 dollars less distribution costs (typically less than a dollar a disc). Older movies I have seen go for as little as 2$ wholesale.

[janstett]

Originally Posted by kalisphoenix

I hope that this pisses off the studios royally. The sooner we shift to a purely electronic method of distribution, the better everything is.

Be careful what you wish for, and which Devil you find yourself in bed with. Remeber Divx, the original Circuit City Divx. The studios want to protect our media FROM us and they want us to forget "fair use" ever existed. Their dream is to restrict access to our media and make us pay for each access to it.

Divx charged you to watch DVDs you "owned" for 48-hour time windows, and you couldn't go from one player to another. Digital media is great, but always remember the studios don't like that you can buy a movie for $20 and watch it as many times as you want or do things like ripping it to an iPod. DRM will creep in and protect your media from you, online distribution only ensures this will happen sooner rather than later.

Not to mention the quality problem. When will iTunes offer 1920x1080 movies with Dolby Digital Plus sound? That's right, never. When physical media goes away, we are all stuck with low quality -- thanks in large part to iTunes and paying for 128 kbps songs and then 320x240 videos. Sonically, we have a generation of people listening to heavily compressed music on crappy earbuds. We've gone backwards from CD, not forward. Rather than going to 24-bit sampling, 192kHz sampling, and 6 channels, at best we get lossless that's still the same as a CD. The high-res audio formats (DVD-A, SACD) failed miserably. HD-DVD and Blu-Ray are just launching but will not grow like DVD did. And here we have people flocking to buy movies with inferior quality to DVD.

[Keebler]

Originally Posted by BrianMojo

Last I checked this kind of anti-competitive action was illegal under monopoly laws...

you might be right...wasn't MS hit with something similar? It's not fair for a distributor to threaten the product producer (OMG..that is bad english, but you know what i mean).

i actually think it's funny b/c the studios don't like to be told what to do by anyone. if using Apple helps distribute their products, i highly doubt they'll listen to wal-mart or anyone for that matter.

it would be interesting to know whether or not WM has specific distribution deals with studios which has language indicating the studios can't distribute.

in the end, it just looks pathetically whiny by WM to cry about this. "OH..we can't sell online so nobody else is allowed...that's not fair." blah blah boo hoo.

losers.

cheers,
Keebler

[gman71882]

Originally Posted by BrianMojo

Last I checked this kind of anti-competitive action was illegal under monopoly laws...

I second that!!! Not only is that against the law, its very similar to what Microsoft did many years ago and got in big trouble for it.
US Vs. Microsoft


A Boycott should be more than just Macrumors members. All apple users should boycott Walmart.

[freebooter]

Originally Posted by BrianMojo

Last I checked this kind of anti-competitive action was illegal under monopoly laws...

They, for the most part, stopped enforcing those laws back in the Reagan years.

Digitalbiker just wrote," Apple and Wal-mart are just companies. They are not evil or benevolent."
True, but they are owned and run by people who can act evilly or benevolently; they are not disembodied spirits or forces of nature. The actions large corporations take can have very bad consequences for real people (not to mention animals, birds, the air, etc.). Corporate amorality is a pretty shabby, threadbare garment.

...and also from Digitalbiker (sorry, i don't mean to pick on you, i'm just commenting in general), "They compete in a very competitive market and can in no way be considered monopolies."
True, but only partly. Apple and Wal-mart do everything they can to limit competition. Besides, at the highest levels, these publicly owned companies are largely owned and run by a relative handful of people--the plutocracy. The idea of a truly free market at the corporate level is a myth.

[ChickenSwartz]

I don't particularly believe this. I don't think Wal-Mart is ever threatened by anything except a union.

[brepublican]

Originally Posted by ChickenSwartz

I don't particularly believe this. I don't think Wal-Mart is ever threatened by anything except a union.

It's just like what happened to Music. Even if it takes off on the iTunes Store, I dont think that the sales of DVDs will be affected very much. So I dont see what the deal would be. Unless its a union

[ChickenSwartz]

Originally Posted by brepublican

It's just like what happened to Music. Even if it takes off on the iTunes Store, I dont think that the sales of DVDs will be affected very much. So I dont see what the deal would be. Unless its a union

I meant union as in Wal Mart fears its employees forming a workers union...nothing to do with movies or Apple.

[BeyondCloister]

Originally Posted by ChickenSwartz

I don't particularly believe this. I don't think Wal-Mart is ever threatened by anything except a union.

Yes they are. They are pulling out of both Germany and South Korea due to the competition.

http://news.bbc.co.uk/1/hi/business/5273642.stm

In China the staff actually got their union.

http://news.bbc.co.uk/1/hi/business/4778973.stm

[rk-hates-spam]

I am American. Perhaps that’s something the executive team at Wal-Mart has forgotten about. I am free to choose where and when I spend my hard-fought dollars. Though Wal-Mart and its team may be able to manipulate those choices, I will always - ALWAYS - have the choice NEVER to spend another dollar at Wal-Mart. Ever.

I mean what the hell… I live in America, not Wal-Mart-ica!

[HecubusPro]

Screw Wal-mart! They should shrivel up and die. I grew up in the epicenter of Wal-Mart's birthplace and it is nothing more than a plague on small-town (and larger city) life.

[Clive At Five]

Last I checked, Wal*Mart sells iPods (Shuffles at least), correct? So a victory in the iPod dep't is a victory for Wal*Mart....?

Okay, probably not. Still, Wal*mart could try to work out some sort of deal with Apple as well... but that's unlikely.

Poor Wal*Mart. After ol' Sam kicked the bucket, the company just hasn't been the same. Now his greedy kids are turning it into an evil empire.

-Clive

[mac-er]

I seem to remember Wal-Mart's CEO saying in a CNBC show that his company doesn't bully vendors.....what a load.

[iMikeT]

Let Wal-Mart cry....