Concept fails to catch on with consumers

With no fanfare and a barely noticeable posting on its website, Wal-Mart has exited the movie-download biz, less than a year after jumping in.

The largest seller of DVDs in the U.S. posted a short message on the website of its movie-download service saying the operation had closed as of Dec. 21. On Friday, in response to media queries, Wal-Mart issued a statement saying it had shuttered the service because Hewlett-Packard, a chief technology partner, had decided to discontinue the key infrastructure for the service. Hewlett-Packard confirmed it had scrapped the project, saying, “The market for paid video downloads has not performed as expected.”

Various industry observers have said the downloadable movie concept is not catching on quickly with consumers. The technology generally requires a fast broadband connection, then some technical savvy to transfer the movie to a television. It is considerably easier, not to mention cheaper, to watch a video-on-demand movie offered through many cable companies. Also, viewing a downloaded movie on a portable device or a computer is less engaging than watching a traditional DVD on the larger screen of a TV set.

What’s more, in the case of Wal-Mart, the digital rights management software attached to the downloads prevented users from playing the movies on more than one computer or on mobile devices such as iPods.

Only Apple, which has sold more than 3 billion songs through its iTunes online store, seems to have had noticeable success in selling movie downloads. It is expected to soon add digital movie rentals from 20th Century Fox to iTunes; it already lets users purchase films from Disney and MGM and is reportedly talking with other studios to add their libraries.

Other services offering movie downloads include Amazon’s digital movie store, Amazon Unbox, which allows customers to download movies to their computers or to transfer them to their TiVo set-top boxes.

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