iTunes Movies Vs. Retail DVDs – How is this unfair to Target and Wal-Mart?

First Wal-Mart, and now Target, are having a pretty severe reaction to Movie downloads appearing in the iTunes online store. Both of the retail giants have stressed that there will be “consequences” if other studios join Disney in offering movie downloads through iTunes. First, I’m surprised they took the Tony Soprano route in threatening the major movie studios, and secondly, I’m really surpised at how little they seem to value the DVDs they are selling (although, I probably shouldn’t be surprised about either of those things).

Let’s look at what iTunes is offering, and what Target and Wal-Mart are selling – and you tell me which one is a better deal -

Features: iTune Movie Retail DVD
Video Resolution 640 x 480 NTSC 720 x 480
Special Features no yes (on most titles)
Accesibility download and watch almost instantly drive to the store to purchase
Portability requires Video iPod
or upcoming iTV to watch off of your computer
can be played in any DVD player in your home or car or DVD drive
Widescreen Presentation no yes
Price $12.95 to $14.95 for new releases $19.95 for most new
releases

Now don’t get me wrong, I love my iPod, but these “threats” from Wal-Mart and Target seem completely unnecessary when you compare the two products. The Retail DVDs clearly have an advantage. Even the price is an “iffy” thing to give to the iTunes Movies because there are quite a few movies in the iTunes store that are $9.95 that I can buy at my local Wal-Mart for $5.50.

I’m sure downloading movies is the future of the medium. I think everyone reading this will probably agree with me on that statement (although I’m sure there will be some heat for my opinion on the iTunes movies Vs. the Retail DVDs charted above), but Target and Wal-Mart have nothing to fear from the current iTunes movie downloads. If anything, I it appears that these large retail outlets are trying to flex their muscles now, for fear of the world changing on them, instead of adapting to the needs of the consumer. I’m sure that’s easier than actually providing a product the way your customers actually want to recieve it, but the real kicker of the whole thing is that they don’t even seem to notice the MUCH BIGGER threat to their sales, Cinema Now.

Right now, you can head over to Cinema Now (assuming you’re a Windows user with Internet Explorer…ugh), and download The Fast and The Furious: Tokyo Drift. Not only can you download it, but you can BURN IT TO DVD….and it’s only $9.95!!!! If Cinema Now ever gets enough sense to allow Firefox, and Mac support, they could be deadily to both the Retail DVDs AND iTunes downloads.

To sum up, it’s absurd that Wal-Mart and Target are get bent out of shape at the idea of Hollywood studios supporting the iPod market. The amount of iPods on the market is huge, no doubt, but the amount of Video iPods is much smaller than total iPods sold – and the amount of those users that are going to want to watch a 3 inch screen for 2 hours is even smaller. iTunes Movie downloads aren’t even going to be that cost effective when the iTV launches in 2007. You’re only saving about $5 dollars per movie, and it’s not like you’ll be able to watch the movies on a television in your house that doesn’t have an iTV hooked up to it (or will you?)…

What Wal-Mart and Target are really worried about is the changing times. They’re just using Apple as a means to focus their discontent with the fact that as broadband continues to spread through the world like wildfire, the method in which we will aquire our entertainment might not need them.

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Comments

  1. Good comparison, but the thing that Walmart and Target are upset about is the wholesale costs. I.e., they’re not making the same amount of profit Apple is because the studios are selling Apple the rights to distribute the movies (per movie) at a significantly lower price than they are selling Target and Walmart DVDs. These companies see this as unfair competition… Anyways… nice format comparison…. Peace.

  2. You missed a few things:
    - physical disc: built in backup of your purchase
    - display case: nice cover art and collectability
    - resale value: you can resell the physical disc, but not the download

  3. No matter how you stress or put it Wal Mart will continue to use threats against its main suppliers in this case Movie studios. Simply put don’t buy Wal Mart you encourage the evil.

  4. You are completely oversimplifying the issue and leaning towards iTunes without a lot of the facts. One yeah they might be worried but no it’s not going to effect their numbers as much. The average consumer will definitely make it out to Wal-Mart/Target to get the hard copy of that new DVD. Because the average consumer is at a major retailer at least once a week so yeah it’s still convenient to buy a DVD while buying other junk. You also blew up the average retail price for DVD’s on purpose and it’s about $15-$17 give or take or a new release DVD and majority of the time if you wait a month or so you can pick it up for $10 on a 2 for $20 deal. The average consumer also isn’t going to go out of their way to set up their iPod to play movies on their jumbo flatscreen TV to watch it in a pixelated state and in stereo sound when they can pop in the disc and in a minute they are watching the movie in great quality in 5.1 surround sound. Why would they give up the obvious advantages for a lower quality product? It’s not going to effect the average consumer. It’s only going to effect the consumer on the go who has a video iPod. Your average Joe isn’t going to have that. It’s a bigger issue than you even realize. Get the facts straight before releasing something completely biased to get people to read your cookie cutter apple blog and get you hits via digg.

  5. what?!? wholesale costs? from what i’ve seen online apple stands to make like 50 cents a movie that gets downloaded. true they don’t have *wharehouse* costs but they do have server and bandwidth costs. to apple it’s not much different than a song… they further sales of iPods, where they make their money. i still don’t understand why wal-mart and target are bitching, but i know it’s not wholesale costs. apple can’t (contract) and won’t (doesn’t make sense) sell the vids for more so the net profit won’t change. my only guess is that this is wal-mart and targets first attempt at a pathetic plea to hang on to a medium that won’t be around for much longer – imho they should just be thankful you can’t download laundry detergent and move on

  6. Cinema Now Comment…it is not full dvd and firstly it is encoded to H.264 and you actually download file with size about 1.3GB and once downloaded it encodes to MPEG but H.264 is not lossless codec so the quality of final ‘DVD’ is far from retail product. If you really want dvd quality with download to burn technology check http://www.eztakes.com which provide full dvd download with covers and dvd label…All they remove from DVD are extras and unnecessary stuff. You get nice download manager with burning facility and you can print covers form there. I have tested Cinema Now and as it uses FluxDVD technology you will never get DVD quality as the base format for encoding is H.264 Movie with size about 1.3GB.

  7. Considering the key quote is consequences, you should probably spell it correctly.

  8. Apple wants it all, take Google, look at google wanting in to expand in to other markets for example Google Video, You Tube, GMail, ect, you know what I mean, everything other than its primary market. But the Physical Disc, I belive that it won’t loose or nothing like that and that it may be 75% market share to Physical Dics (Such as DVD, Blu-Ray, HD-DVD) and 25% market share to Downloading.

  9. With the DVD you also get special features, and an ability to play it on any DVD playing machine (computer or standalone) rather than just the 3 computers you have registered with iTunes.
    It seems to me that the only advantage that iTunes has (besides its organizational aspect) is immediacy. You can get your media almost instantly, and with TV shows you don’t have to wait months or years to get the episode on DVD.
    Another iTunes disadvantage, besides the lower quality, is that Apple reserves the right to change the usage agreement unilaterally (as they did when they stopped iTunes streaming over the net), so you are at the mercy of their whims.

  10. thats too bad. I don’t really care about walmart and target. Walmart makes enough money in the first place and really ruins things. And walmart only carries certain movies ( i.e censored ones) so it does not make a difference.

  11. Wally Sheeple Walmart says:

    Imagine Walmart trying to tell other businesses how to do business …

    Who woulda thought such a thing ??????

  12. @ Chriz

    Wal Mart does not carry edited DVDs. Their CDs are censored, but that is only because there isn’t a 3rd party company to review CD content -its up to the record label whether or not to up an “EXPLICIT LYRICS” sticker on the CD.

    Furthermore…

    If wal mart was smart, they would be trying to work with apple or heck, even Creative to come up with their own (affordable) video player and offer consumers downloads to said player via kiosks in their stores and the internet. They would get far more consumers and visits to their site because, like everything else in Wal Mart, they would be shooting for the lowest common denominator. Trying to screw apple isn’t going to get them anything but hate. Instead of trying to hurt them directly they should be coming up with something better. Its shouldn’t be too hard considering their net worth is like ~$60 billion.

  13. Court Kizer says:

    What do you mean no widescreen presentation on the iTunes Movie store? Even the iPod lets you choose between widescreen and normal mode for the movies, granted it sucks watching them on the iPod but why would you do that?

    I use my Mac Mini, hooked to the HDMI input of my 60″ Hi-Def television, and use front row, I don’t know how you can say the only way to watch the movies is on the iPod or iTV.

    My Mac Mini is an iTV right now, only it has a full OS, and a bunch of other features, not to mention it has a remote. Works perfectly as a more expensive iTV for me right now, and it even plays h.264 widescreen movies like “Pirates of the Caribbean” rather nicely.

    Also it’s incorrect that all DVDs use 720 resolution, many actually use 500, or 640resolution not to mention the added benefit of h.264 encoding on the movies, Honestly on some content this is NO difference between watching the DVD version I own of Pirates of the Caribbean, and the iTunes version. It looks exactly the same.

  14. one reason for me why i’d never consider Dvdpurchase if iTunes download available.
    kids.
    the dvd lasts atwo weeks tops, then its unplayable.

  15. Just an FYI, there is widescreen content available through iTMS.

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