With the number of homes with broadband internet connections growing, downloading TV shows and feature length movies has become faster, easier and much more common. Apple (Nasdaq: AAPL) has had a video iPod on the market for a year, and Disney (NYSE: DIS) says that the new Apple device has driven over one million downloads of its content. Video downloading can no longer be called a fad or a fringe business.
Everyone Is In The Download Business.
When Movielink, one of the original download services, launched over five years ago, the idea that consumers would wait hours for a film to download to their computers seemed far-fetched, and on top of this, customers were being asked to pay for the privilege. File sharing services offered the opportunities to get the same content, for free. It was piracy, but millions of people had been doing it with music.
As broadband connectivity through DSL and cable increased, more companies saw an opportunity to make money by sending films and TV shows over the internet. Disney launched its own download service. Movielink was finally able to get enough customers to make it a viable business and there were rumors that Blockbuster (NYSE: BBI) and NetFlix (Nasdaq: NFLX) would move toward the download model to save the cost of maintaining stores and mailing DVDs.
Amazon (Nasdaq: AMZN) announced its own online video service, with a device to allow the content to be watched on TV. And, the Apple video iPod gave consumers a chance to watch video on a handheld device. Cellular providers including Verizon Communications (NYSE: VZ) launched services of their own.
DVDs Drive Traffic
Sales of DVDs drive traffic to stores like Wal-Mart (NYSE: WMT), Best Buy (NYSE: BBY), and Circuit City (NYSE: CC). As new movies move to disk, it gives customers a reason to go back to these stores. When they come in to pick up the latest DVD, the may buy something else. The foot traffic from movie purchases became an important element of the "repeat customer" process.
But, some customers have stopped coming, at least to buy DVDs. As the American public moves to getting its video online, large retailers are faced with a vexing problem. If they can't beat the download services, should they join them?
Wal-Mart has already made the decision. It has a new video download service at Wal-Mart.com that offers 3,000 titles. Wall Street is skeptical whether consumers will buy video downloads from Wal-Mart, but its website is one of the most visited in the world. Whether customers who go there to buy socks will stop by the download section is still to be determined.
While it is still too early to tell whether it will work, retailers are definitely getting into the movie download business.
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