Digital Home Thoughts: Wal-Mart Dabbling in On-line Video

"When Wal-Mart looks out at the digital landscape, it sees opportunity, if not success. The retailer behemoth tried its hand at the online music gig, but came up mostly empty. Now the company wants to try again, this time with video. Wal-Mart strikes fear into the hearts of many. Both Money and the Financial Times, which are carrying the rumor, make much of the fact that Wal-Mart is the world's largest DVD retailer, accounting for more than 40% of sales in the US alone. What neither story reports, however, is this very important fact: Wal-Mart is also the world's largest music retailer. How did that work out for their music store? Not well. Despite the fact that Wal-Mart carries its tradition of loss leading into the online world by selling songs for $0.11 cents cheaper than Apple, Wal-Mart languishes with less than a couple of percentage points of market share. Wal-Mart, like all brick and mortar music retailers, has lost market share to Apple."



After Wal-Mart's less than stellar performance in the on-line music market and failure in the on-line DVD rental market, I was about to give this one the old ho-hum. But then I read this:

"The retailer is still apparently debating price models. One option Wal-Mart is considering is a free digital download of the movie along with a purchase of the DVD version at a Wal-Mart store. Another option is letting customers purchase a download of the movie for a few extra dollars when they buy the DVD version at the store."

Done right, Wal-Mart will be on to something. Buy the DVD and get the download for free for your other devices. The success is as a value add, not as an all new product. Once users become accustomed to buying the digital product, then phase out the DVD.