Wal-Mart slashes DVD prices to $10, potentially spurring price war

In an unprecedented discounting move that could signal a price war that would benefit the major movie studios and cash-strapped consumers, Wal-Mart has slashed the price of a number of the upcoming DVDs of big-budget summer movies to $10 on its website.

That appears to be the lowest price ever offered by a major retailer on highly anticipated new releases, according to people at studios' home entertainment divisions. Among the films on sale for $10 are "Star Trek," "Night at the Museum: Battle of the Smithsonian," "Harry Potter and the Half-Blood Prince" and "Terminator Salvation."

The big discounts are only for the top 10 pre-ordered movies on the site. Recently released hits like "Transformers: Revenge of the Fallen" and "Ice Age: Dawn of the Dinosaurs" cost $13.98 and up. In addition to the price cutting, Wal-Mart.com is also offering free shipping on all of its DVDs.

A link on its website indicates that Target is moving to match Wal-Mart's discounting. There isn't yet any indication whether Amazon.com will follow as well.

The price cuts are good news for movie studios, because they will spur demand in a year during which DVD sales are down more than 13% thus far. The wholesale price paid by Wal-Mart and its competitors remains unchanged at about $18, meaning studios will make the same profit on each disc.

It's normal for retailers like Wal-Mart to price DVDs below their wholesale cost at physical locations and online to draw customers who often spend more money on other items.

The deepest discounts usually go to about $14, however. $10 marks a big loss that Wal-Mart and Target will be taking on each movie, especially with free shipping.

The move comes as Wal-Mart.com and Amazon.com are in the midst of a book price war that has seen the price of some new-release hardcovers fall as low as $9. If Wal-Mart's discounting spurs a similar price war over movies, it could provide a significant boost to holiday movie sales and the studios' bottom lines.

-- Ben Fritz

Photo: A shot from the Wal-Mart.com website.

Comments

[Good Movies Plzzz]

Good article! thanks for the information. Love a good movie at a good price!!

[Not biting]

Sorry, wouldn't shop at Walmart if they payed me $10.

[Nancy Wilson]

Yes- by all means start a pricewar! DVDs are too expensive for a little plastic disk- especially older ones.

[Rufus]

why would one buy dvd's when the internet spits them out for free and at high quality??????????????????????

[Marc Cuevas]

DVD's are coming to an end. There is no way the inefficiencies of producing, shipping and marketing a physical media product can or will ever be able to compete the efficiency of digital distribution. I watching iTunes quickly over taking DVD sales in certain niche markets and I believe it'll be in short order that we see this the main stream market. On iTunes you can already find content in High Definition selling for less then a Standard Definition DVD.

But where this should be getting particularly scary for the big studios, is in how it reflects on the glut and inefficiency of their overall business model.

[Mickey]

Why pay when you can watch it for free?
Why own a physical disc when the trend is internet?

[Bill]

Given the fact replication cost for each DVD or music CD is way under $1 and the cycle time is about 5 seconds, this does not represent a great value to the consumer. Even with all content royalties paid and distribution included, buying a DVD is still a vast ripoff. --- As far as a 'threat' from internet distribution is concerned, its a myth. Nothing beats the silver disc for a permanent copy of music, computer backups, and movies.

[Uh oh]

Making new release DVDs this low sets a bad precedent. Consumers will then start to expect to pay this much every single time and hold back until it hits this price point. That's bad news for the Studios, as I would be concerned even with these big-box retailers taking such huge hits on their DVD profit margin.

[Carlos]

I just tried to order the newest STAR TREK, but it says it can't be shipped to CA. Looks like there may be some glitch or that it's only for certain states.

[LarryA]

To respond to all the posts about "Why?": Because! There are a number of reasons to own the physical disc. What if your internet connection is down, or you don't yet have a streaming-to-TV setup? What if you care about extra features, or quality? Some people still do care, and can see and hear the difference. Would an audiophile listen to an old music cassette if he had a CD? iTunes streaming is good, but it still isn't Blu-Ray quality. What about captions, special features, etc? Not (usually) available (yet) on streaming. Watching Netflix on your TV? The limited "HD" offerings from Netflix are *maybe* standard definition DVD quality, but nowhere NEAR true High Def. And the standard def titles there are sometimes just unwatchable if you have any kind of eye for technical issues. Etc, etc.

Now, don't get me wrong. Yes, DVD's are too expensive and always have been. (When the format was being developed, the pitch was that titles would be sold at around $12 or so. Ha.) And I watch a lot from online (HD titles from iTunes and Netflix) and rentals (Netflix Blu-Ray.) But to suggest that there's no value in physical media is to ignore a lot of quality and content issues.

This whole thing about Walmart & Target doesn't matter to me anyway if they're just talking about standard DVD's. Now that Blu-Ray is here, I've bought my last DVD. (Would you go buy something on VHS any more?) And, I too wouldn't shop at Walmart if you paid me.

[Robert Walcott]

Before long, prices will be where they should have stayed all along. "After Monterey", http://www.blueribbonpress.net/Flyer2.htm

[Ricky Tick]

Nothing new. These big-box stores have been doing this
no-profit loss leader stuff forever. Sure, you get a deal on 10 titles, but the other
64 thousand will cost 'ya.

Their PR machine uses this as "news" to get the Times and others to
give them free advertising! Yuk Yuk..

[Irene Klein]

Remember folks, these DVD movies were already shown in the movies. The producers and studios already made a profit. DVD is extra gravy for them. These DVDs should cost less because the only cost is the disk and replication time.

[susan]

Hollywood is so bad they should be pay their audience to watch their movies.

[Dirtt]

There is a reason DVDs aren't selling. Most is junk. I feel sorry for the recipients of the junk and hope it's only going to be the stocking stuffer vs. the big one under the tree.

Hollywood. Look in the mirror. Harvey Weinstein's Moral Compass hopefully will lead you into Chapter 7. Enjoy the downward spiral.