Walt Disney Paving Its Way to Digital Movie Sales

"Toy Story 3" promotion with Wal-Mart follows low-key launch of a Web site

NEW YORK - Walt Disney Co. is laying the foundations for boosting digital movie purchases, the LA Times reported Monday.

The entertainment giant in May quietly launched Disney Movies Online, which lets consumers buy or rent digital versions of films and watch them online. Disney isn't promoting the website yet beyond mentioning its address on sleeves inside DVD and Blu-ray packages as it is still in a test phase, the Times said.

In a more public move, Disney this month partnered with retail giant Wal-Mart to offer a free "digital copy" of Toy Story 3 to consumers who bought the film on disc.

The initiatives come as industry watchers predict that sales of digital movies will take off once studios address - like Disney is doing - technical hurdles for consumers. Also, amid recent sluggishness in DVD sales, digital sales are seen as a high-margin business given there is no packaging cost involved.

"We believe if we harness the power of these separate initiatives …we'll immediately seize the opportunity, extend a lot more benefits to Disney customers and sort of catapault this thing into the future very rapidly," Bob Chapek, distribution president for Walt Disney Studios, told the Times.