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Walmart today announced that they are officially jumping into the movie and television download business head first, and will launch their new site later today.

This is an extremely crowded market and Walmart will compete against other movie download sites like CinemaNow, MovieLink, Amazon Unbox and iTunes. In addition to battling Netflix’s new service and an expected download entry from Blockbuster in the not so distant future.

However, one major technology flaw for Walmart is the lack of a solid recommendation engine to discover the movies on the site.

In 2005, Walmart was the scene of “RecommenderGate” when consumers looking for Planet of the Apes were directed to movies about Martin Luther King Jr. Expectedly this was found offensive to many and was all over the blogosphere. The end result was the whole recommender system being taken down and the loss of customer respect for the service.

Will their new recommendations be up to par??

This probably the reason for launching it in "beta." They're obviously looking at it as a supplemental addition to their overall music strategy, rather than a full-blown attack like iTunes and the others.

I think the reason they aren't in as much of a hurry either is until the ease-of-use connected to a TV comes about, this is going to be a service not embraced by the masses.

The key differentiator that supported Netflix's creation was catalog films. That was the core need that they met (of course they included new releases in their offerings). Before Netflix, there had not been a model that significantly made available and monetized ‘catalog’ films.

Then Blockbuster adopted a similar model that heightened the availability of catalog films. Recent developments make it so catalog films will be widely available from retailers. First through mail order from Wal-Mart by mid year, 2007, and then additionally from other retailers through in-store download and burn kiosks. See below for background:
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Red Herring
The Business of Technology
Wal-Mart Intros Movie Downloads
…Wal-Mart will use the foray into digital movies as a way to build a full-service online store aimed at home entertainment.

“We view this as the first step to move toward a multi-format and multi-channel strategy,” said Cameron Janes, director of digital media for Wal-Mart. “We are looking at leveraging the digital platform to support manufacturing on demand and offer a range of movie titles.” Those include independent films, foreign films, as well as hard-to-find titles.

Willem de Zoete, head of HP’s digital entertainment services business, said the company is building a business based on custom DVD distribution.

About 60,000 DVD titles will also become available through a mail-order service in which consumers have an option to go online and order the discs. The service will launch mid-year.

© 1993-2006 Red Herring, Inc. All rights reserved.
http://www.redherring.com/Article.aspx?a=21142&hed=Wal-Mart+Intros+Movie+Downloads#
‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’
‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’
Cleared for Takeoff
Imagine in-store download and burn to DVD kiosks at Wal-Mart, Target, Best Buy, and/or Walgreens? Extremely cost effective availability of tens of thousands of titles. The content owners, retailers, and consumers all win. And the environment, too. No more online, physical DVD rental models that involve millions of physical deliveries each week.

Video Business Online
DOWNLOAD-AND-BURN CLEARED FOR TAKEOFF
Movielink plans summer test with new CSS-enabled discs
By Paul Sweeting -- Video Business, 2/8/2007
FEB. 8 | The DVD industry has cleared the way for retailers and consumers to burn movie downloads to DVD for set-top playback.
The steering committee of the DVD Forum on Jan. 31 formally approved technical specifications for a new type of recordable disc for use with in-home and in-store burning of CSS-protected movies, removing the last remaining administrative hurdle to commercial deployment of download-and-burn services…

Online download services have been waiting for the approval to give consumers the option of burning movies they can now only play on their PC or portable device.
Studio-owned download service Movielink plans to begin testing burn-to-DVD downloads this summer and offer it to all consumers by the fall, chief marketing officer Mary Coller Albert said…

Wal-Mart also is said to be considering adding download-to-burn for its just-launched service.
“We expect that to improve over the course of the year, and we’ll continue to aggressively explore/evaluate opportunities and models for this option over the next year,” Wal-Mart said in an e-mailed statement…

With the final specs approved, disc makers can now begin manufacturing DVD Download blanks for sale to consumers and in bulk for enterprise applications such as in-store burning kiosks.
The discs are similar to standard DVD-R’s but are “pre-keyed” with CSS decryption codes so they can accept encrypted data.
The use of CSS—the same copy-protection system used on commercially pressed discs—is considered critical to ensuring that discs burned from downloaded movie files will be compatible with all set-top DVD players…

Initially, download-and-burn may be a bigger opportunity for bricks-and-mortar retailers that bring in DVD burning kiosks rather than for online download companies…

“In theory, it can be a very nice revenue generator [for retailers] without having to give up any kind of significant footprint,” Goodman said.

© 2007, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.
http://www.videobusiness.com/article/CA6415121.html