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DVD retailers threaten studios

dvd.gifDVD retailers Target and Wal-Mart are concerned that legal movie downloads are eroding their sales, and Target have written to studios and warned them that they will "reconsider the amount of shelf space allocated for movies" if they continue to see the prices of Internet downloads fall below their wholesale prices.

The news comes from a studio exec who talked to the Associated Press and wished to remain anonymous, the story comes through Corporate Media News. Target have since declined to provide the press with a copy of the letter.

In a prepared statement Monday, Target called for "equity between the alternative means of delivering movies to consumers...Target does not object to competition, but we do expect a level playing field upon which to compete with the online services," the company said.

The really do mean business, however right now the facts stand against them. According to the story downloads account for less than 10% of current movie sales. Add to that the fact that most downloading services don't offer the extras that are on most DVD's nowadays, and that on iTunes only Disney are offering their movies. It's quite a restricted market. However analysts expect it to pick up and for this to become a real concern to retailers in the future.

What this could mark is the start of a levelling of the playing field. Either DVD shelf prices will lower and become more in line with downloadable films, the download prices will increase to match DVD shelf prices, or nothing will happen in the prices and we'll see a shift to a complete Internet sales model. I could see the first happening, but not the other two. Is this something to make you start thinking about, or will the studios ignore the retailer's threat?





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Comments

It's only a matter of time before downloads completely take over. Maybe not tomorrow, but certainly within the next ten years. And very soon the quality and extras (including artwork and labels) will be just as good as a store bought DVD.

If I was a movie studio, I'd tell Target to go stuff it and that they won't be bullied. It may hurt them in the short run, but eventually, it won't matter anyway, because downloading will take over.

And, if Target or Wal-Mart is smart, they will enable people to download movies right in their store. Like a downloading booth or something.


~Drewbacca

I think that's a cool idea. Allow people to buy a device and load it up in store, or get into the internet download business right now themselves and then give the shelf space to other items. Makes much more sense to be with the move early on rather than fight it.

Mark Cuban has been talking about the portable drive distribution angle for a while:

http://www.blogmaverick.com/2004/08/21/hdtv-dvd-hard-drives-and-the-future/

As far as this story is concerned, it seems silly to me that they want the same price. A DVD and an iTunes movie download, as we've discussed on this site, have two totally different sets of features (extras, quality, interoperability, etc.). The iTunes download is arguably overpriced for what you get compared to the DVD so I guess I don't really see why retailers have an issue.

That said, DVDs are probably overpriced so more power to 'em...

I hope Target and Walmart and others continue the fight. I like buying DVD vs. downloads. I don't like the idea of downloads taking over at all. If that happens, they just won't get MY money. Downloads are too restrictive. Let me count the reasons why: 1)you don't get any cool packaging to look at. 2)you have to download it to begin with- which means waiting and probably having to give up more personal info than you'd like to just to access the download. 3)if you get tired of the movie, you can't simply sell it. 4)you can't bring it over a friends house to watch. 5)you have to watch it on your lousy 15" pc screen. 6)you don't have a massive wall of DVDs in your living room to quantify your existence.

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