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Wal-Mart States Position on Movie Downloads

Reuters reports that Wal-Mart Stores Inc. disputed a report saying it was trying to dissuade movie studios from working with other forms of distribution, such as Apple Computer Inc.'s iTunes.

The 'New York Post' reported that the world's largest retailer had warned Hollywood it may retaliate against studios for selling movies on iTunes amid concerns that Wal-Mart's DVD sales will suffer.

Wal-Mart disputed the Post report and said it was not pressuring movie studios into shunning online delivery. "Customers want to watch movies and they want to be able to make the choice when and how they want to view them," a Wal-Mart spokeswoman said. "While we recognize there are various current and potential providers of this service, we are not dissuading studios from conducting business with other providers."

A source familiar with the situation said while big retailers like Wal-Mart "freaked out" earlier in the year when Disney and other studios began selling TV shows on iTunes and other Web-based platforms, they showed no particular concern when Disney became the first studio to offer movies on iTunes.

The source, who declined to be identified, said the discount retailer learned over the intervening months that customers who currently download -- primarily young, single males -- are not the same as those customers who buy DVDs. Of course, when the practice of digital video downloading evolves beyond the early-adopter segment, then there will be real cause for concern.

Therefore, retailers who exclusively rely on the in-store sale of digital media must apply strategic foresight, based upon current events, and seriously consider a plan to launch their own online offering. The decline in music CD sales demonstrates the very apparent trend, and you really don't need to be an industry analyst to predict the next chapter -- as the ongoing digital media storyline unfolds.

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