Wal-Mart Reducing DVDs, Digital Delivery Is Inevitable

Guest blog by Lee Distad

The big news (from my perspective, anyway) this week was that Wal-Mart has decided to shrink the square footage that it gives to DVDs. The underlying reasons include devoting more space to product with higher turnover, while cutting back on inventory carrying costs. That's unsurprising, since music and movie retailers have been pruning their back catalogues for years, since those stale inventory costs are a drag on the bottom line. One music retail veteran once quipped to me that "without careful management, my record store would become a museum of the unsellable!"

More important, digital delivery of entertainment content, HD or otherwise, is kicking into gear. Regardless of the platform, consumers want it, and content providers and hardware vendors are working on it.

There's inarguably a sea change at work. Two years ago, anytime I wrote about digital delivery, I'd get hate mail from technophiles who would assail me with silly arguments about why HD downloads would "never happen." The most common arguments I had to endure were, the downloads would require "too much bandwidth," or even worse, "I like owning a hardcopy!"

Today, nobody bothers to refute my commentary with those arguments, or any other. If anything, when I mention alternative forms of digital delivery, such as flash downloads from a kiosk at the grocery store, I'm liable to get comments like: "I have to go to a store? No thanks, I'll do it at home instead!"

If more proof is required, witness the proliferation of devices that are download-enabled, including not just straight-up set-top boxes, but hybrid devices. Am I the only industry person who finds it vaguely perverse to see vendors bow Blu-ray players that have NetFlix imbedded in them? I'm not saying those devices are a bad idea, just that they seem a little tentative.

Regardless, this is the wave that the whole industry is riding, and it's driven by consumer demand. In my house, we both watch VOD or order up and store HD PPV movies on our HD PVR to watch at our convenience far more often than we either rent videos or buy DVDs, and we're not alone in that. That's only one piece of the digital delivery puzzle, for sure, but overall, this is the direction that consumers, and buy extension, the whole industry, seems to be taking.