iTMS v. Wal-Mart

I’ve posted about Wal-Mart before. I admire the heck out of them for one simple reason: They save consumers a ton of money.

On several occassions I worked closely with the packaging group, warehousing group and with the buyer trainer within Wal-Mart. They’re an amazingly focused outfit!

BusinessWeek and Don Dodge are suggesting some numbers that just don’t make sense based on what I’ve experienced in Bentonville: There’s no way Wal-Mart is paying $17 to the studios for a new release DVD. First, they sell way too many DVD at less than $17 for that to make sense. Wal-Mart’s not in the business of selling much of anything lower than their price. Second, Wal-Mart doesn’t tell ANYONE what they’re paying for goods. So, it’s highly likely that their supplier blabbed a number or someone’s playing the misinformation game for yet to be known reasons.

It’s important to understand this might forebode a bigger problem for Wal-Mart than Apple can be for them, short term. If they’re selling hundreds of millions of units and let’s say they’re actually paying $10/DVD wholesale. The studios may just come back and say something like, “We don’t know who you’re paying the $17 to but we want our price renegotiated.” All of a sudden Wal-Mart has a bigger conflict brewing. Wouldn’t surprise me if someone at outside Wal-Mart nominated a fictional number to the press. It’s in everyone’s interest outside Bentonville to keep Mr. Porter at Wal-Mart off balance.

Finally, there’s the whole distribution method. Apple’s iTMS is doing as well as it is primarily because of the iPod. Add full length movies to the deal and they’re either going to affect the way consumers digest their media OR leave us wanting for something better to play these movies back on. I think we’ll see a new device out of Apple to “help” us consume more video in the living room.

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