Wal-Mart, Blockbuster soar into vid download market

'Superman' DVD has online offer

Wal-Mart and Blockbuster Inc. said Tuesday that they will begin selling video downloads over the Internet, entering a potentially lucrative business that up to now has been dominated by such exclusive online sellers as Movielink, CinemaNow and Apple's iTunes.

In addition, Time Warner chairman and CEO Richard Parsons indicated Tuesday that as early as next year, consumers will be able to download versions of Warner Bros. Pictures movies from the Internet that can be burned onto DVDs — most likely on the same day the studio-issued DVD goes on sale in stores.

Speaking Tuesday at the third annual Reuters Media Summit in New York, Parsons said the world's largest media company "will be in a download-to-burn mode in 2007 — it will be a part of next year's offerings."

Wal-Mart took the first step by giving consumers who pick up a DVD of the newly released "Superman Returns" an optional video download for an additional fee: $1.97 for a download playable on portable devices, $2.97 for a download that plays on PCs or laptops and $3.97 for a download playable on both portable devices and computers.

Warner Bros. Home Entertainment Group president Kevin Tsujihara called the arrangement "an unprecedented offering that plays to the strengths of Wal-Mart's successful DVD business while breaking new ground in the nascent digital video download market."

Blockbuster was quick to follow. Chairman and CEO John Antioco, also speaking at the Reuters Media Summit, said the video rental chain may introduce a movie download service next year, possibly in partnership with a cable or satellite provider.

Traditional brick-and-mortar retailers have eyed the advance of video downloads with trepidation. In meetings with studios, Wal-Mart and Target Corp. have expressed fears that downloading could cut into their DVD businesses. In October, Target sent a letter to studios warning them not to give download services preferential pricing, with company president Gregg Steinhafel saying, "It is apparent that movie downloading is a competitor to DVD sales."

Wal-Mart said it will test additional physical/digital DVD bundles in the coming months and also introduce a beta video download service that will sell movie and TV shows "from a number of top studios and TV networks," according to a company statement.

Kevin Swint, Wal-Mart's divisional merchandise manager for digital media, said the bundling "not only marks our first step into the video downloads market but also gives our customers the best of both worlds in movie entertainment. They have the DVD as a collectible and for viewing on their home theaters, plus the freedom to download and watch the movie on multiple devices, including portable media players, PCs and laptops.

"We believe that as we expand this offering to other movie titles, our customers will come to value this extra option as one of the benefits of buying a DVD at Wal-Mart," Swint said.

"Superman Returns" DVDs sold at Wal-Mart come with a sticker on the cover with a concealed promotional code. Buyers of the DVD can go to www.walmart.com/superman, enter the code and select their desired download format. After creating an account and installing a Wal-Mart Video Download Manager, the purchase completes and the movie begins to download.
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