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Yet another example of bricks-and-mortar scale not translating to online sales power and of grand online video plans deflating … Reuters r…

imageYet another example of bricks-and-mortar scale not translating to online sales power and of grand online video plans deflating … Reuters reports that Wal-Mart (NYSE: WMT), one of the largest sellers of DVDs, shut down its same-day-as-DVD video download service, citing Hewlett Packard’s decision to discontinue the service that powered it. The plug was pulled Dec. 21, far more quietly than the movie/TV download service began in February. No download details but you have to think if the service was successful, Wal-Mart would have found a new vendor to keep it going.

But Wal-Mart’s decision not to look for another partner meshes with HP’s own explanation that the company discontinued its merchant store services for video downloads because the market did not perform “as expected.” The HP spokesman also told Reuters (NSDQ: RTRSY) the internet video business remains uncertain and is changing rapidly. (Not exactly sure what suddenly clued them in to that or why anyone would rely on HP for technology in emerging areas following an example like this.) HP just announced in October that it had signed up 30 digital content partners to use HP Video Merchant Services; trying to find out now where that leaves them. The shut down of the IE-reliant, Windows DRM-based service also is a loss for Microsoft (NSDQ: MSFT). The move follows AOL’s (NYSE: TWX) decision to outsource its video download sales to Amazon (NSDQ: AMZN).

Wal-Mart pulled the plug on its online DVD rental service before it tried downloads. This effort — a beta supported by all the major studios at launch — was supposed to be the foundation for a “multi-channel, multi-format offering for our customers,” as Kevin Swint, the division merchandise manager for digital media, told me back then. So much for that.

Still functioning: Wal-Mart’s MP3 download store.

Update: Gizmodo: “The store’s sudden death actually isn’t too surprising even though it was less than a year old and the first one to sport content from the “big six” studios. Who thinks “Wal-Mart” when they think ‘video downloads’…” Purchased downloads are still viewable — but can’t be moved from the original computer used.

  1. In a frenzy to catch up with Apple, the industry hasn’t learned much from the PlaysForSure debacle by watching Microsoft abandon its own DRM and introduce Zune with a new and incompatible system to compete directly against its erstwhile digital music “partners.” In another instance of mortgaging success to others’ willingness or ability to innovate, AOL recently moved its struggling video service to Amazon Unbox which in turn is based on Microsoft’s PlaysForSure.

    The irony here is that Wal-Mart relied on HP that relied on Microsoft and AOL relies on Amazon that relies on Microsoft which itself no longer relies on its own PlaysForSure. When a core component of a product or service depends on the rate of innovation of another party over which you have no control or influence, it’s time to rethink strategy. It’s also time to ask yourself, twice or thrice removed from core competency, should you really be in such a business?

    Strategic design risks (1): Wal-Mart’s foolhardy reliance on “partners”
    http://counternotions.com/2007/12/28/walmart-video/

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  2. I've tried services like Vongo, AT&T;broadband, and so forth the big problem was outdated content. Neither Vongo, or at&t;broadband has recent content or would of kept them. Personally even if Walmart came out with a good service I wouldn't spend a dime on it.

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