US retail giant Wal-Mart has launched a large-scale video download service.
The company has started a beta version of a video download service that will feature content from nearly every major US movie and television studio.
"This marks a significant step for Wal-Mart in home video, and enables us to better serve our customers as they begin to complement DVD purchases with downloading digital video content," said Kevin Swint, divisional merchandise manager at Wal-Mart.
Movies will be available for download on the same day that the DVD is released in stores. New titles will cost anywhere from $12.88 to $19.88 and older titles will start at $7.50. TV shows will cost $1.96 per episode.
20th Century Fox, Disney and Warner Bros are among the eight major film studios that have committed to the new store. Comedy Central, MTV, Fox and Nickelodeon will be among the TV networks offering content.
Apple said that it expects to add more major studios to the iTunes store during 2007.
Although the Wal-Mart store features similar pricing and a larger library, analysts believe that it is unlikely to become an iTunes killer in the immediate future.
"Whether you're Apple or Microsoft, your main goal is to promote the [media player] device," he said. "Apple does not make that much money from the sales of songs or videos."
The analyst pointed out that, although Wal-Mart may link the service with a media player in the future, the retailer seems to be trying to leverage its video business in a new medium rather than poaching existing customers from Apple.
Chanko maintained that Apple has created a closed ecosystem safe from competing services by locking the iPod and iTunes together.
"I think that the iPod is in a whole category by itself, not because it is a better device, but because it has a very loyal user base," he said. "If I were Steve Jobs I would be interested, but he is not going to be worried."
The big question, according to Chanko, is not whether Wal-Mart can compete with Apple, but whether a company based largely in low-income rural and suburban areas will find a willing audience in the wealthier, primarily-urban tech-savvy market that buys streaming videos.
"The average Wal-Mart customer is probably not tremendously broadband connected," said the analyst. "So you have to ask how effective the Wal-Mart brand is going to be."
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