Big Guns Target iTunes Video Store

The iTunes Video store has grown gradually since it started, but it has not quite taken off the way its audio counterpart did. The reasons are various, ranging from the price point to the lack of a living room computer connection.

This week, two major announcements in the online sales of video have made the field a lot more interesting. On the one side we have the giant of the brick-and-mortar industry, WalMart. On the other, we have the giant of the online industry, Amazon.

WalMart has not been able to make a huge dent in e-commerce, partially because the Internet has levelled the playing field for retail players of all sizes. WalMart’s strengths are in providing cheap prices in every town across the United States, and its bargaining power. The former does not mean as much on the Internet; the latter still does.

In this week’s announcement, WalMart has one-upped Apple (and many other players) by directly announcing a service with movie downloads from all of Hollywood’s major studios and many big television networks. While the prices start lower than iTunes—$7.50 for many older titles—the newer titles are in the same range. Of course, WalMart has tried to beat iTunes with lower prices in their music store—$0.88 vs. $0.99—but has not gained a significant chunk of that market.

WalMart’s service is currently in Beta and does not work with Mac OS X. Oh well.

In the other corner, we have Amazon’s UnBox service, which has seen a lackluster performance for many months now. Their newest move may change that. One of the biggest problems with online video sales is getting the movies to people’s TVs. With the music stores, people were able to move their music to CDs (already their preferred medium) or their MP3 players with ease. The video stores have made it nearly impossible to burn DVDs and it is still very hard for most people to get the video to the best televisions in their house.

So Apple built the Apple TV device and hopes it will be their gateway to people’s living rooms. Amazon has chosen to partner with a company that already has a gateway to people’s living rooms—TiVo.

This is a fantastic move—one that will go a long way to helping Amazon gain traction. If I was a TiVo user, I would prefer to buy a video from Amazon UnBox just for this reason—and there are millions of TiVo users out there. With TiVo partnering with Comcast, this number is likely to grow many times over, unless Comcast figures that it competes with their On Demand service. Microsoft has already tried this with the Xbox marketplace and the Xbox360, with some success.

Apple TV will be a tough sell for people who already have 360s or TiVos in their living room—and once again, as it was with the iPod and iTunes, our choices of online media stores are being inseparably linked with our choices of media hardware.