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Apple in Talks with Wal-Mart over Movies 176

Posted by Zonk
from the ugh-corporate-politics dept.
Alex, Variety.com writes "If you can't beat 'em ... Apple and Wal-Mart are in discussions over an alliance that could allow the giant retailer to profit from iTunes video downloads. Apple would then gain access to titles from every major studio." From the article: "A deal could take the form of a digital download 'coupon' that would allow consumers to buy movies, TV shows or music on iTunes with Apple paying the retail giant a percentage of the proceeds, one industry insider said ... Hollywood has been closely watching Disney's relationship with Wal-Mart in the wake of the deal. When Wal-Mart caught wind of talks between the studios and Apple, it threatened to cut its order of 'High School Musical' over the summer. Disney CEO Bob Iger did the deal with Jobs anyway, and the rest of Hollywood has been watching to see if and when the other shoe drops."
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Apple in Talks with Wal-Mart over Movies

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  • by z-kungfu (255628) on Friday September 29, 2006 @10:28AM (#16244691)
    that's what Apple would be doing... Grow some balls Steve...
  • Jump in logic (Score:5, Insightful)

    by badasscat (563442) <basscadet75@@@yahoo...com> on Friday September 29, 2006 @10:30AM (#16244721)
    Apple would then gain access to titles from every major studio.

    This is a huge jump in logic. It's assuming that the reason why Apple doesn't have access to these titles now is strictly because Wal-Mart is competing with iTunes. The fact remains Apple will still have to hack out distribution deals often on a per-title basis, and many of the studios don't want to offer most of their movies for download at all. It's got nothing to do with Wal-Mart.

    All this deal would do is remove one of the smaller obstacles Apple faces in getting more films on iTunes (and my bet is Wal-Mart is probably the least of Apple's headaches). The big obstacles - copyright, DRM, distribution rights, contracts between various parties, etc. - would still remain.
  • by DeadChobi (740395) <(DeadChobi) (at) (gmail.com)> on Friday September 29, 2006 @10:34AM (#16244795)
    I've got a solution for that. Simply buy the DVD, then rip it and encode it. Presto, you've got your digital download and a hard copy all in one.
  • by dougman (908) on Friday September 29, 2006 @10:34AM (#16244799)
    I'm not sure I see why this is a "If you can't beat 'em - Join 'em" deal. Was Apple trying to beat Wal-Mart?

    Seems to me that they're just looking to a different channel to market their product since the first channel wasn't interested.
  • by nweaver (113078) on Friday September 29, 2006 @10:37AM (#16244861) Homepage
    Wal-Mart's aleged threat to cut Disney orders if Disney started selling through iTunes would, in an honest administration, be an instant anti-trust lawsuit by the Department of Justice.

    Its perfectly legal and valid for Wal-Mart to squeeze its suppliers when they sell to Wal-Mart, but to threaten suppliers because they are selling through other venues, when Wal-Mart has an unquestioned monopoly in many areas, would be asking for intervention.

    However, with the current DoJ completely toothless, and prefering Seattlements (eg, the Microsoft anti-trust resolution) to actually going after entrenched business interests (especially hard-core republican supporters like the Waltons), Wal-Mart doesn't need to worry.
  • Freaking Christ. (Score:4, Insightful)

    by JKConsult (598845) on Friday September 29, 2006 @10:39AM (#16244873)
    It's a wonderful thing for Wal-Mart and I don't really fault them for doing it, but this is basically extortion on a grand scale. A new delivery model threatens the very thing that gives Wal-Mart its advantage (their distribution system), and instead of competing straight-up, they threaten their suppliers to the point that the new distribution model has to throw them some money to STFU. So the new distribution model has a chance to compete on a level playing field (being able to offer the same products.) Again, well-played by Wally World, but just sickening.
  • by smidget2k4 (847334) on Friday September 29, 2006 @10:39AM (#16244875)
    Seriously. If Wal-Mart will be profiting from each download sold then I simply won't buy the downloads. I haven't given Wal-Mart a red cent in years and I don't plan to start because it is through Apple.
  • by steveo777 (183629) on Friday September 29, 2006 @10:47AM (#16244997) Homepage Journal
    Wal-Mart sucks the essense out of every product they buy. They've put more companies out of business by buying their products than by moving into small towns and setting up shop. I hate Wal-Mart and refuse to buy anything there unless absolutely necessary. If Apple starts dancing with the Devil, I'm probably out of ITMS for good. Sure, I'll let them give me iTunes updates and update my iPod, but I will stop buying music from them. I never purchased movies from iTunes, but this would definately stop me.

    Got a lot of friends who've been working for Wal-Mart for years and have been getting the shaft the whole time. Wal-Mart does not care about its employees or suppliers. I work in the health-care industry, particularaly with insurance providers. Wal-Mart contracts through Blue Cross of Illinois for benefits of their 'full-time' work force. (Meaning 40 hours a week, but they won't pay you overtime if you work 60 one week and 20 the next). You want a bad benifit package, ask a Wal-Mart employee. The government offers far better insurance for people below the poverty line and for much cheaper. And your average full-time (non-manager) Wal-Mart employee is at poverty-level income.

  • Simply buy the DVD, then rip it and encode it.

    Digital downloads are the ultimate in impulse purchases. Say, for example, you're sitting at home on a weeknight, there's nothing on TV, and you have too much time on your hands before bed. Do you:

    a) Get dressed, get in your car, drive to Wal-mart, purchase a DVD, wait in the checkout line, drive home, and pop it in the DVD player; or

    b) Open iTunes, browse the movie/TV selections, download and watch your movie/TV Show

    If you've got broadband, "b" is almost always preferential. Option "a" is just too much of a hassle, and the store may be closed anyway. (Especially for those poor late shift workers.) The only thing that holds consumers back on making that sort of purchase is price. No matter what studios think, a digital download does not have as much intrinsic value as a packaged Disc. Which means that if the consumer feels that the digital price is too close to the price of the physical copy, they're not going to spend the money. While studios may think this means that the consumer will go purchase the DVD, more likely it means that they'll purchase NOTHING.

    If they wanted the movie bad enough to get a DVD, they would have gotten a DVD rather than a digital download. DVDs have more value as "keepsake" items due to their special features and permanent, physical storage. Thus digital downloads will be likely to complement DVD sales rather than usurp them. Which means that Walmart should keep carrying Batman Begins, but they can drop Ultraviolet.
  • by d0n quix0te (304783) on Friday September 29, 2006 @10:52AM (#16245075)
    Apple's Wins:

    1. Walmart sells a boatload of iPods. Apple probably wants to keep Microsoft out of the game... Given Walmart's purchasing power, Steve will insist on two things: a)squeeze Microsoft on cost margins further exacerbating Zune's losses b)iPod gets premium shelf spacing other players including Samsung and Microsoft get stored in the back c)iPod accessories get better placement (taking it further perhaps extending Apple's store within a store concept from CompUSA to Walmart d)leverage for margin negotiations over iPod sales

    2. Fairplay.... Walmart does not take backstabbing lightly. Microsoft's strategy to drop PFS (remember Walmarts 88cent store is based on PFS) support and create a new DRM standard reeks of screwing their partners. Sure Microsoft thinks they can get away with it because they are a Monopoly. But Walmart is a monopsony.... when a monopoly meets a monopsony its like Godzilla meets Mothra..... Walmart is going to put its weight behind Fairplay... this will create quite a bit of momentum for Apple

    3. Apple gets to have major studios onboard with Walmart's support ...

  • by LoudMusic (199347) on Friday September 29, 2006 @11:02AM (#16245213)
    I'm having trouble seeing why Wal-Mart has such a big deal with this, other than they can be dicks about it and get away with it.

    It's my experience that the people who would be buying movies online are not necessarily the same people who regularly shop at Wal-Mart. There are overlaps, definitely, but on the whole the two markets don't overlap. And maybe that's just my own standard biased view point, but this just seems like a classic bully situation. Wal-Mart needs to be put down.
  • by Anonymous Coward on Friday September 29, 2006 @11:10AM (#16245341)
    This seems like a clear violation of the The Sherman Act (1890), the Clayton Act (1914),the Robinson-Patman Act (1936) and Federal Trade Commission Act (1914). Why is this allowed to happen?
  • by everphilski (877346) on Friday September 29, 2006 @11:20AM (#16245571) Journal
    Apple specializes in selling low quantities of very expensive items. Wal-Mart specializes in selling high quantities of very cheap items.

    Congratulations, this is why it could work out. You now have the spectrum of people who buy cheap (walmart) and people who pay the Apple Tax (apple). You have two different segments of the market that neither one can hack due to stereotypes. And when you combine their powers...
  • by purpledinoz (573045) on Friday September 29, 2006 @11:31AM (#16245807)
    Let's be real here. Apple likes to make money. If this deal is good for Apple, then good for them.
  • by unity100 (970058) on Friday September 29, 2006 @11:36AM (#16245917) Homepage Journal
    An international retail store chain. There are MANY of that kind.

    The Internet, is BIGGER than not only wal-mart, but ALL retail store chains combined.

    Wal-Mart, YOU have to adapt to the modern times. Modern times will not adapt to your ways.
  • Hardly appropriate (Score:3, Insightful)

    by thinkzinc (668822) on Friday September 29, 2006 @12:03PM (#16246461)
    Job's balls have nothing to do with this issue. Wal-Mart sells 40% of the DVD's from Hollywood. The comapny has threatened the movie studios and so far they are not willing to work with Apple. The new move by Wal-Mart shows that they are an extortion racket. They are also the bigger player. Apple does not have the upper hand. And you should also consider that Wal-Mart can launch its own service. They do not need Apple.
  • by coolgeek (140561) on Friday September 29, 2006 @12:17PM (#16246705) Homepage
    Hollywood really should call Walmart's bluff. No way Walmart is going to hand over 40% of the DVD market to Target, Kmart, Costco, Best Buy, etc. It's the studio execs that need to grow some balls.

    And for your completely laughable comment about Walmart launching their own service, I would like to remind you this is precisely what Walmart did when the iTunes Store started selling music. Do you know anyone who buys their Windows-only tracks at $.88 a piece from this service? If you do, I'll bet you know at least 10 people using iTunes for every one using the Walmart service.
  • by Breakfast Pants (323698) on Friday September 29, 2006 @12:57PM (#16247441) Journal
    Church may not directly do so, but indirectly, they sell fancy clothes. Church is a veritable fashion show I tells ya.
  • by King_TJ (85913) on Friday September 29, 2006 @12:58PM (#16247467) Journal
    But see, your explanation just goes to show that Wal-Mart has no need to offer their employees more. Apparently, they're functioning just fine by using employment of apathetic or depressed people -- groups who don't seem to be good enough workers for anyone else to hire.

    When you look at it that way, it seems like a bad idea to complain that they should pay their workers more! Why reward apathy? People always have "other choices", really. They just don't have other choices they're willing to put forth the effort to take advantage of. (And hey - that's human nature. I know *I* could do better for myself, financially, if I was willing to make some sacrifices I don't choose to make. But that's my own personal "comfort zone". And it sounds like for some of these Wal-Mart workers, theirs is having a steady paycheck and a job at "poverty level income", vs. having to learn new skills or deal with personal problems they may have.)
  • Future is Digital (Score:3, Insightful)

    by ElitistWhiner (79961) on Friday September 29, 2006 @01:09PM (#16247697) Journal
    FTA:: "Customers who throw a disc in their shopping carts spend an average of $75 per trip to the store -- far more than those who don't pick up a DVD."

    Walmart's air supply is DVD's, period.

    FTA:: "Studios are trying to calculate how much longer DVD sales -- 40% of which go through Wal-Mart -- will be a cornerstone of their business."

    Walmart is sucking thin air unless they replace sales lost to Digital downloads.

    FTA:: "Studio sources say the rest of the majors (Hollywood studios) are very close to joining Disney in a deal with Apple but are holding off until the end of the key fourth quarter (Xmas), when half of all DVD sales occur."

    Walmart is out of air after Xmas.

    Walmart is the next Luddite if they don't transition with their customer's, Hollywood and popular culture going over to Digital.

    In play are Walmart customer's, who's going to win their Entertainment dollar$ and live off the follow-on patronage represented by that $75.00 shopping basket. I would venture that Amazon is looking pretty good to Walmart right about now. A Bricks&Clicks deal would put Walmart's distribution behind every Amazon click to bring real leverage to the marketplace.
  • by steveo777 (183629) on Friday September 29, 2006 @01:31PM (#16248023) Homepage Journal
    And you've hit the nail on the head. And I believe it explains part of the undeniable sense of depair I feel whenever I have to walk into a Wal-Mart. Especially the 'ghetto' Wal-Marts that have fallen into K-Mart levels of disrepair.

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