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Retailers cautious over movie downloads

9 April 2007 18:14 by James "Dela" Delahunty | 1 comment

Major retailers that account for millions of DVD sales every year are afraid of what movie downloading means for physical product sales. Music downloading has already taken a bite out of CD sales, stealing the business of "singles" from the CD format. The decline in CD sales and interest in buying CDs has had an effect at major retailers like Wal-Mart and Best Buy, who rely on cheap CDs and DVDs to keep customers returning to stores.

Now that movie download services are evolving, Wal-mart has already jumped into the ring, Best Buy hopes to by the end of the year and Blockbuster pondered purchasing MovieLink. DVD sales rose 5% last year, which was down from a 9% increase in the previous year and NPD research suggested that growth would slip faster if it wasn't for TV show sales on the DVD format.

"They're seeing fairly rapid declines in their CD business. That's likely to happen in their DVD business," said Andrew Hargreaves, who covers electronics retailers for Pacific Crest Securities. Wal-Mart's download service sold 3,000 movies in its first month - hardly an impressive figure, but it still puts the giant in the lead when compared to its rival retail chains.

Apple Inc. hopes that its major success in legal music downloads will lead to similar results for movies, although thus far, several vital elements of the music download success are missing from movie downloads, including the "one price to fit them all" concept that sounds less than appealing to movie studios. Also, movie downloads are much larger, taking way longer to download and watching full-length movies on an iPod isn't "that" appealing.

Services like Netflix might have more success with their customers, as they are already an Internet-based company and one can only assume the average Netflix user is more tech/Internet-savvy than the average street retailer's customers. Microsoft and Sony will also be major contenders as both are selling gaming consoles capable of playing high-definition video and connecting to the Internet, and Microsoft's Xbox Live Video Marketplace even offers some HD movie downloads.

These are just early times for (legal) movie downloading however, and it will take at least a couple of years before any retailers need to start worrying.

Source:
CTV

Permalink to this article

Amazon and TiVo bring video downloads to TV (7 March 2007)

BitTorrent launches BitTorrent Entertainment Network (26 February 2007)

Lions Gate adds movies to iTunes (12 February 2007)

Amazon and TiVo team up for movie downloads (7 February 2007)

Wal-Mart enters movie download business (6 February 2007)

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limelight (Member) 9 April 2007 18:20
Not to worry. I think most people would rather burn it to dvd than watch it on a PC. [ + quote]