Wal-Mart to Launch Digital Movie Store

Wal-Mart Stores Inc. is launching its long-awaited online movie download store, entering a market that has yet to catch on with consumers but is expected to grow rapidly.

A "beta" version of the online video store, is set to debut Tuesday, will sell digital versions of about 3,000 films and television episodes from all the major studios and some TV networks, including Fox Broadcasting. Wal-Mart will not initially offer content from ABC, CBS or NBC, although the company said it hopes to add shows from those networks. The nation's largest retailer is using its buying power to beat the prices charged by other download services in many cases, offering films from $12.88 to $19.88 and individual TV episodes for $1.96 — 4 cents less than Apple Inc.'s iTunes store. Most studios have resisted signing deals with iTunes in part because of Apple's desire to sell movies at one price. Studios prefer variable pricing such as Wal-Mart is offering. Wal-Mart's online store will sell older titles starting at $7.50, compared with the $9.99 charged by iTunes. Unlike some offerings, Wal-Mart will not rent films online. The films can be played on a PC or transferred to Microsoft Windows Media-compatible portable digital players. The movies will not play on Apple computers or the popular iPod. Movies bought from the Wal-Mart store also can't be burned onto a DVD, although the company said it hopes to offer the option by the end of the year. Internet downloading is expected to generate about $4 billion in annual revenue in five years, compared with an estimated $27 billion from DVD rentals and sales, according to Adams Media Research. Whether Wal-Mart can translate its success on the ground to the digital domain remains to be seen.