Wal-Mart enters digital download market with “beta”

Joining hands with all six major Hollywood studios--Walt Disney, Warner Brothers, Paramount, Sony, 20th Century Fox and Universal, retail giant, Wal-Mart Stores, Inc. is all set to sell digital movies and television shows on its Web site.

Becoming the first traditional retailer to do so, with the move Wal-Mart enters into direct competition with established sites like Amazon.com, CinemaNow and iTunes.

A "beta" version of the online video store launched on Tuesday will sell digital versions of about 3,000 films and television episodes from all the major studios and some TV networks.

However, Wal-Mart will not initially offer content from ABC, CBS or NBC, although the company hopes to add shows from those networks soon.

Using its buying power to beat the prices charged by other download services, digital download at Wal-Mart will cost $12.88 to $19.88 on the day of the DVD release. While older movies will start at $7.50 and TV shows at $1.96 an episode, officials revealed.

Unlike other 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 only.

Furthermore, movies bought from the Wal-Mart store can't be burned onto a DVD, although the company hopes to offer the option by the end of the year.

After stumbling once before with online video rental service, this time, however, Wal-Mart has brought together the majors in Hollywood market, company said. It has also created an easy-to-use Web site with Hewlett-Packard and developed a broad library of videos.

“By becoming a Web destination for videos, Wal-Mart would bolster its position as an authority for all things digital, perhaps enticing customers to buy a PC or television at either WalMart.com or a store”, an analyst at Deutsche Bank Securities, Bill Dreher said.

The company expects about $4 billion in annual revenue in five years from the Internet downloading business.