Streaming in flyover country

Retail Good on Sony Pictures for partnering with Walmart and Vudu on a digital movie card for Battle: Los Angeles. Starting Tuesday, Walmart shoppers will be able to buy the cards for $14.96, and then use the provided code to watch the movie on their PC from the Vudu website or on any of the 300-odd connected TVs and other devices that have the Vudu streaming app embedded.

Since the offer is a purchase, not a rental, card buyers will be able to watch the movie (in standard definition only) as often as they like, just as they would with a purchased DVD or Blu-ray Disc. Walmart is selling the Battle: Los Angeles DVD for $16.96 and the Blu-ray for $19.96. The movie

“Digital movie cards are a great way for Walmart’s millions of movie customers to own and watch digital movies through the Vudu service,” Vudu general manager Edward Lichty said in a press release. “By partnering with Sony Pictures Home Entertainment on this exclusive new movie card, we’re transforming a physical purchase into a digital ownership experience, in a way that is easy for customers to understand and access.”

“Digital movie cards allow us to take digital transactions into high-traffic, brick and mortar retail environments like Walmart, and provide a bridge from the DVD aisle into the digital age,” added John Calkins, executive VP of global digital and commercial innovation for Sony Pictures Home Entertainment. “Our goal is not only to educate off-line consumers about the digital films and services available to them, but also to increase the convenience of buying and gifting digital content.”

Digital movie cards for other titles, from Sony and other studios, are expected to find their way into Walmart stores later this year.

Why bother selling digital movie vouchers in a brick-and-mortar store in the first place, you might ask? Isn’t the whole point of digital delivery to avoid the whole trip to the store in the first place (to say nothing of the return trip if it’s a rental)?

Only if you don’t know the history of the home entertainment business.

The home video business, and in particular the DVD business, was able to achieve the enormous success it had for three decades because it made movies into something retail-able — something that could be sold on a shelf in a store at a price point commensurate with rest of the merchandise for sale and with the budgets of ordinary shoppers. That allowed Hollywood to leverage the enormous reach, merchandising and marketing clout of Walmart and other mass retailers, to say nothing of their buying power and supply chain efficiencies.

It was the leverage of retail that gave the home video business its scale, which produced the margins that made it  Hollywood’s largest and most profitable revenue stream for many, many years. For two-plus decades, Walmart wrote a bigger check to the major studios each year than any other single customer in any distribution channel.

Anyone who thinks the digital business can achieve the same sort of economies of scale the studios’ enjoyed from the fast-disappearing DVD business,without bringing along the Walmart audience, is kidding himself.