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Apple in Talks with Wal-Mart over Movies
Posted by
Zonk
on Fri Sep 29, 2006 09:26 AM
from the ugh-corporate-politics dept.
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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Wal-Mart Threatens Studios Over iTunes Sales 415 comments
Y-Crate writes "It seems Wal-Mart is threatening retaliation against studios who decide to offer movies on iTunes. The Bentonville, AR retailer seems a bit miffed that someone would dare to undercut their prices. This wouldn't be the first time they've turned on a supplier for dealing with Apple." From the article: "Last year when Disney announced it would begin offering episodes of the hit shows 'Lost' and 'Desperate Housewives' on Apple's iTunes, the reaction of the world's largest retailer sent shockwaves through the entertainment industry. Wal-Mart, worried that offering the shows for viewing on iPods would cut into DVD sales at its stores, sent 'cases and cases' of DVDs back to Disney, according to a source familiar with the matter."
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Retailers Pressure Studios on Web Deals 202 comments
mikesd81 writes "Over at the Associated Press, there's an article about retailers pressuring movie studios for the same deals that online servies are getting. Target has sent a letter warning 'that Target might have to reconsider the amount of shelf space allocated for movies if studios undercut the wholesale price of DVDs by giving online services a better deal on digital offerings.' At issue is the low price some studios charge for films downloaded through such fledgling services as MovieLink, CinemaNow and Amazon.com's recently launched video store. The two-disc rerelease of Disney's 'The Little Mermaid' now retails for $14.87 at Wal-Mart and $14.99 at Target. The movie can be bought for $12.99 on iTunes."
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Getting in bed with the devil... (Score:2, Insightful)
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I expect you'll still be able to boycott Wal-Mart, download music and support artists all at the same time.
He does have some (Score:5, Funny)
Parent
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Actually, the CEO of Wal-Mart is H. Lee Scott, Jr.
I just hope Wal-Mart isn't corrupted by the pomaceous behemoth.
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Hardly appropriate (Score:3, Insightful)
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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 a
Jump in logic (Score:5, Insightful)
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.
Re: (Score:3, Informative)
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Re:Jump in logic (Score:5, Informative)
walmart has heavy handed tatics
something most people don't know is that the way walmart does supplier contracts is they place the order - it is delivered - they only pay for the product once it go out the door. While the items are sitting on the shelf or in the back room walmart has no money in them.. like wise when someone returns some thing it goes back to the supplier and walmart gets a credit for it.. so if they order 1000000 widgets and just let them sit in a warehouse for 3 months and then just send them back the suplier paid to make and ship 1000000 widgets and then 3 months later got them handed back to them and never say a dime while the whole time they have all their money on the line.
they break companies.. i have heard stories from people that work in their ware houses about how they will place orders and then when they arive hold them.. and wait then call the supplier back up and demand a reduction in the price or they will send them back because they don't feel it will sell well. at that point unless the supplier is huge they don't have much choice. The way walmart does their suppier contracts makes this all legeal - and they woln't use you if you don't accept the terms..
Parent
Only for BIG suppliers (Score:4, Interesting)
The suppliers are actually happy with the arrangement, because it's a deal point, and they can extract better pricing by working with that system. While I'm sure that Wal-mart has played hardball as you described, it's a little overstating to suggest that that is the normal way of doing business.
My friend also suggested that the buyers have been becoming less adversarial, and trying to produce more win-wins. Sure the Wal-mart culture is there... normally buyers get taken out to lunch with salesmen who entertain them... a bit of sneaky corruption, the buyers are pushed to gives a little bit of the company's money to get well treated by the salesmen. At Wal-mart, salesmen go to Wal-mart HQ, no meals are allowed. All negotiations take place in a small room at Wal-mart HQ. By keeping their buyers from trading favors with salesmen, they keep their costs down.
Walmart does MANY things... they are aggressive, but not necessary under-handed. However, they have a LOT of maneuvering room in the industry, and if they can make real money by selling Apple iTunes movies in the store, they WILL bring market pressure on the studios to play ball.
Alex
Parent
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Studios give WalMart a contract to distribute their movies...
WalMart gives iTunes a sub-contract to distribute those movies...
Saves a lot of trouble if that would work out.
OTOH, if WalMart comes to an agreement with iTunes & the studios aren't happy with it, you really think that the studios are going to lock out WalMart?
Not sure this means what I think it means (Score:5, Interesting)
Re:Not sure this means what I think it means (Score:4, Insightful)
Parent
Re:Not sure this means what I think it means (Score:5, Insightful)
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.
Parent
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I love the instant gratification of iTunes Music Store (deadly on the bank account when combined with a laptop, home wireless network and The Alternative on VH-1 Classic...), but I don't think the experience is the same when your downloads are 4x the size.
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BZZT. Try again. I start watching iTunes downloads within seconds of the download starting. There's usually enough bandwith for full streaming.
You don't really think that Apple is sending MPEG-2
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You make money (the wal mart and ipod way) by selling to the masses. Do you think the average DVD consumer knows how to rip and encode their dvds? Do you think that everyone, even if they have the time and ability, will want to go that route???
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If you can't beat 'em? (Score:4, Insightful)
Seems to me that they're just looking to a different channel to market their product since the first channel wasn't interested.
Sweet deal! (Score:5, Funny)
Note to self: sue everyone!
In a honest administration, Wal-Mart should worry (Score:5, Insightful)
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.
Re:In a honest administration, Wal-Mart should wor (Score:5, Insightful)
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.
Parent
re: Wal-Mart and employment (Score:2)
Ultimately, no business can continue offering poor pay and benefits and survive, unless people keep on signing up to work at those poor wages.
I mean, I get why Wal-Mart might have initially gotten away wit
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I am sure that if these people could get jobs elsewhere (k-mart, target or any other place) they would. But they cant.
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Another reason they don't leave is becuase all the other r
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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 th
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Hmmm (Score:2)
Whatever one things of Wal-Mart, they aren't run by idiots. If the on-line distribution of video is going to happen in the future, and surely it is, it would be in their best interest to get in on the ground floor with the best (ie most proven, most popular, and
Freaking Christ. (Score:4, Insightful)
Is this premature? (Score:5, Interesting)
If I were in Apple's place, I think I'd wait a while before giving in to any major retailer. On the other hand, I don't know how gift cards sold at retailers work -- if everyone else who sells an iTunes gift card gets some cut off the top of the cost of the card, then I don't see any issue letting Wal-Mart play in that game, too (which, according to the article, they don't at present).
Didn't a lot of studios initially balk at the idea of TV over iTunes, fearing it'd hurt DVD sales? Somehow I think that movies would go the same way, with initial reluctance, phenomenal sales of the initial Disney titles, growing acceptance, and finally becoming just another standard sales channel.
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In my book that accounts to weekly sales of roughly $131mm
$131mm=40%*$17bn/52
I think Wal-Mart wouldn't give a fart even if iTunes sold $10MM worth of movies in the first week.
Money is Hollywood's lifeline, and cutting a weekly flow of $130MM sound's pretty life threatning to me
cringley (Score:3, Interesting)
The success of Apple's movie download business right now depends mainly on not alienating Wal-Mart.
So for the moment Apple tells Wal-Mart that movies sold through the iTunes Store won't be a threat because of their lower than DVD
resolution. When that fails, Apple will point out that HD-DVD and Blu-ray are coming and Wal-Mart should stop worrying. But
eventually Apple will succumb to its need to sell yet more iPods and will point out that its little gizmo is a fine substitute
for an optical disc. Take your iPod to Target and fill it with movies. Or, better still, buy an iPod at Target and THEN fill it
with movies. Remember that in the end this is all about selling more razors, not more blades, so movie sales don't really matter much to Apple as long as iPods are flying off the shelves.
2 Things (Score:2, Interesting)
First of all, just let me buy something online via a download without any digital coupons or anything like that. A novel concept would be that I would go to a website, pick a movie and download it. It's pretty complicated, granted, but I think it could be implemented. But that's neither here nor there...
Secondly, and completely unrelatedly, from TFA:
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So pretty much I would like to be able to buy movies in the same way that I rent pay per view/onDemand movies now.
I always thought that by now, 6 years into the new millenium, we would hav
Apple has a lot to gain.... (Score:5, Insightful)
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
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(if you don't, skip to the end of the plot section [wikipedia.org])
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That just sounds extra scary...
Wal-Mart just being a dick because they can (Score:3, Insightful)
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.
So let me get this straight... (Score:2)
[sarcasm]Maybe they should adopt the diamond industry's business model and maintain an artificial scarcity to keep prices up.[/sarcasm]
These asshats don't have the first
So what if Walmart pulls Disney movies (Score:2)
The real danger is Wally World shoehorning itself into a position of an exclusive distribution channel, which raises the spectre of RIAA again. The $$$ isn't in the product, it's in the distribution channel and WalMart wants to be there. Maybe the revenue from their cut can go towards providing de
Just WHO is Wal-Mart ? (Score:3, Insightful)
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.
Here's an idea . . . (Score:3, Interesting)
Future is Digital (Score:3, Insightful)
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.
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Is this DRM movies? If so I hope that I can still buy them in the shop. I mean I really enjoy watching a movie now and then.
You know DVDs have DRM on them already, right?
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dont have to have anything in common (Score:3, Insightful)
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...