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Walmart unveils ‘disc-to-digital’

Five studios on board for in-store DVD conversion

Walmart announced an in-store service Tuesday that will allow consumers to create digital versions of DVDs they own through deals with five of the majors.

The “disc-to-digital” feature will be available starting April 16 in 3,500 Walmart stores nationwide for titles from the homevid divisions of 20th Century Fox, Paramount, Sony Pictures, Universal and Warner Bros. Walt Disney Pictures is not taking part in the effort.

Consumers will be charged $2 to convert standard definition, high-definition or Blu-ray discs to digital, which will be available across devices via Walmart-owned streaming service Vudu. Upgrading discs to high definition will cost $5.

“We’re proud to be partnering with the leading movie studios to provide more choices for customers and breathe new life into America’s movies in ways that weren’t possible before,” said John Aden, executive VP of general merchandising at Walmart, who was joined by reps by all participating studios in a press conference at the Hollywood Roosevelt Hotel.

Walmart also announced it would be joining the industrywide’s struggling Ultraviolet initiative, which the disc-to-digital feature hopes to bolster. “This is a monumental step forward for Ultraviolet,” said Sony Pictures Home Entertainment president David Bishop. “It’s really going to move the initiative forward.”

The effort will be supplemented by a multi-month marketing campaign both in-store and across media aimed at educating consumers about Ultraviolet and the disc-to-digital backed by a budget on par with launching a “blockbuster film,” according to Warner Bros. Home Video president Ron Sanders.

The studios see disc-to-digital as a way of maintaining the viability of the physical disc business that has been a primary revenue driver over the past decade while accelerating the electronic sell through market, which is growing — but not at the rate that the DVD business is declining.

Assembled studio reps hailed disc-to-digital as a groundbreaking development not only to breath new life into Ultraviolet, but into the value proposition of ownership in general, which is of crucial importance to the studios. Hollywood is seeing much stronger uptake online for rental opportunities that deliver far smaller profit margins.

An estimated 10 billion DVDs have been purchased to date in North America. “Even converting a small percentage of that makes it the largest cloud overnight,” said Sanders.

Walmart will be the exclusive in-store partner to the studios but only until the fall when other retailers could join. The studios’ hope is that Walmart’s massive footprint becomes an ideal training ground for consumers to better understand the digital movie marketplace.

The initiative will be a boost for Vudu, which allows consumers to both buy and rent movies across a growing footprint of connected devices that exceeds 50 million.

Discs consumers bring in for conversion do not have to have been bought in Walmart. Consumers also keep their DVDs after the conversion. DVDs of TV shows aren’t yet covered but are expected to be eligible for conversion in the future.

While Walmart may have a lock on in-store disc conversion in the short term, consumer electronics companies including Samsung have already announced their intent to make the technology available in homes through devices such as Blu-ray players.

Simon Swart, executive VP of 20th Century Fox Home Entertainment, defended the price points citing consumer testing. “We think two and five dollars are right in the sweet spot,” said Swart.

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