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Wal-Mart Shutters Movie Download Service

28 Dec, 2007 By: Erik Gruenwedel

The nascent market for Hollywood movie downloads from the Internet took another hit when Wal-Mart Stores Inc. confirmed it had ceased operations of its site Dec. 21.

The Bentonville, Ark.-based retail behemoth launched the service in February, offering about 3,000 movies and TV shows from 20th Century Fox Television, Warner Bros., The CW and Comedy Central, among others.

Fox apparently didn't waste time finding an alternative distribution channel and reportedly is considering offering movie rental downloads on Apple's iTunes Store.The service was supported by Hewlett-Packard Co., which reportedly shuttered the download-only merchant store technology due to limited demand.

It wasn't immediately clear whether the closure affected the on-demand DVD merchant service HP launched in October.

Wal-Mart said in a statement that the service was discontinued due to an internal “business decision.” The shuttering does not affect Wal-Mart's music download service.

Earlier this year, Google Inc. shuttered its video download service and last month AOL ceased operations of a similar service. Bankrupt Movie Gallery Inc. in December halted operations of MovieBeam, a Web-based service that offered movies via a proprietary set-top box.

Blockbuster Inc., which recently acquired movie download service Movielink, has said it intends to expand the service when market conditions are appropriate.

On the site https://mediadownloads.walmart.com, a list of frequently asked questions explained, among other things, that consumers who purchased movie downloads and TV episodes could continue to watch them.

The content cannot be burned to discs and played on a standard DVD player or transferred to an Apple Inc.'s iPod.

Arvind Bhatia, media analyst with Sterne Agee In Dallas, said closure underscores the reality that movie downloads thus far do not make economic sense.

“People still like to browse in person,” Bhatia said. “Stores are still relevant, DVD by mail is still relevant and kiosks are becoming more relevant.”

He said it signals a “thumbs up” for packaged media at least in the near term.

“The comfort level and technology [for movie downloads] are not there yet,” Bhatia said.

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