MarketWatch, 2/6/07
Wal-Mart launches internet film service

Wal-Mart on Tuesday launched its long-awaited internet film service, offering films from all of Hollywood's main studios in a move that could see the retailer challenge Apple's iTunes platform for supremacy in digital downloading.

Unlike iTunes, the Wal-Mart service has the backing of Warner Bros, Walt Disney, Paramount, Sony, 20th Century Fox and Universal. More than 3,000 film titles are being made available, including recent releases such as The Devil Wears Prada and Superman Returns.

The launch comes amid industry concern at slowing DVD sales growth. Selling films on DVD has long been an industry cash cow, allowing studios to make back the cost of producing and distributing their films.

But with the DVD market maturing, analysts are forecasting a slowdown this year, which has forced the studios to consider other forms of distribution.

The Wal-Mart launch comes weeks after Paramount became the only studio to join Disney on iTunes. However, Paramount is only selling selected titles from its film library on iTunes, and will not be selling new releases. Other studios had avoided doing deals with iTunes primarily because of fears about upsetting DVD retailers such as Wal-Mart and Target.

Wal-Mart sells more DVDs than any other chain in the US and had expressed concern about the effect of downloading on DVD sales.
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