Retailing giant Wal-Mart made its move into the online movie download market yesterday, launching a beta version of its online video store that will sell digital versions of about 3,000 films and television episodes. Although its film offerings span all the major studios, Wal-Mart's television fare will not initially include content from ABC, CBS or NBC, although it will have content from Fox Broadcasting.

The largest US retailer is using its buying power to beat the prices charged by other download services in many cases, offering films from $12.88 to $19.88 and individual TV episodes for $1.96 - four cents less than Apple's iTunes store.

Wal-Mart also used its significant clout to launch its online store with films from all major studios. Given that the Bentonville, Arkansas, retailer accounts for about 40% of DVD sales, studios have readily agreed to sell films on the retailer's new site.

Unlike some stores, Wal-Mart will not rent films online. The films can be played on a PC or transferred to Microsoft Windows Media-compatible portable digital players. The movies will not play on Apple computers or the popular iPod. Movies bought from the Wal-Mart store also cannot be burned onto a DVD, although the company said it hopes to offer the option by the end of the year.

Wal-Mart says it does not expect digital sales to cannibalize its retail DVD business for many years. "Customers have a growing interest in downloading video content, but complementary and supplemental to buying content on DVD," Kevin Swint, Wal-Mart's divisional manager for digital media, told the Associated Press.

Whether Wal-Mart can translate its success on the ground to the digital domain remains to be seen. Wal-Mart abandoned its efforts to build an online DVD rental service in 2005 to compete with the well-established Netflix Inc.

The retailer also faces the same challenge that confounds other online video sellers - the fact that films cannot be easily transferred from a computer to a larger TV screen. "The real problem is people want to watch these movies on their television set," said principal analyst Josh Bernoff of Cambridge, Massachusetts-based Forrester Research. "There already is an effective way to do that, which is to buy a DVD."

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