Wal-Mart's Speeding Bullet

Slow delivery times have proved that the digital video delivery revolution isn't exactly "faster than a speeding bullet." But it must be "more powerful than a locomotive" if even its most ardent critic is on board.

This morning, Wal-Mart (NYSE: WMT  ) announced that it will bundle the DVD of Time Warner's (NYSE: TWX  ) Superman Returns with digital downloading features. Shoppers buying the physical disc will be able to pay $1.97 for a digital download version of the superhero flick for portable devices. They also have the option of paying $2.97 more for a larger, computer-ready version or $3.97 to get both digital options.

Yes, this was the same Wal-Mart that was screaming until it became hoarse when Amazon (Nasdaq: AMZN  ) and Apple Computer (Nasdaq: AAPL  ) began offering movie downloads this summer at prices that undercut actual DVD prices. It's funny how they all seem to come around once they embrace the concept of incremental revenue.

The Wal-Mart offering isn't for everyone. In a nod to Microsoft (Nasdaq: MSFT  ) loyalists, the downloads will only work on Windows XP systems and require the latest version of Windows Media Player to watch. You can't burn DVD copies of the film (other than for archival purposes, because the film will only play on the PC on which it's registered).

Despite the limitations, it's still a bold move for Wal-Mart. Even if it is starting to look sheepishly hypocritical because its add-on digital downloads are significantly cheaper than the stand-alone downloads at Amazon and Apple, it's important for Wal-Mart to embrace digital distribution even if it means losing the pricing and operating efficiency advantages that have made it such a ferocious competitor in the bricks-and-mortar world. If that's the way the market is heading, it had better get there . faster than a speeding bullet.

Wal-Mart and Microsoft have been singled out asMotley Fool Inside Valuepicks.Time Warner and Amazon.com have been recommended toStock Advisornewsletter subscribers.

Longtime Fool contributor Rick Munarriz has probably spent more at Wal-Mart's online store than at its offline empire in recent years. He does not own shares in any of the companies in this story. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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