Wal-Mart abandons online flicks

LITTLE ROCK, Ark. — Wal-Mart Stores Inc. has closed an online movie download service it launched less than a year ago.

The retreat for Wal-Mart, which accounts for about 40 percent of all DVD sales, follows the company's 2005 decision to abandon efforts to build an online DVD rental service. The world's largest retailer instead turned its rental service over to Netflix Inc.

Wal-Mart still operates a music download service and continues to sell CDs and DVDs at retail stores and over the Internet for shipping by mail.

A message on Wal-Mart's video download Web site said the store closed Dec. 21. The Web site said customers who have already bought movies could continue to watch them.

In a statement, Wal-Mart spokeswoman Amy Collella said the company closed the store after Hewlett-Packard Co., which provided the software running the site, "made a business decision to discontinue its video download-only merchant store service."

Wal-Mart did not say whether it would attempt to start the service again using a different company's software.

HP spokeswoman Anna Ichel Buxbaum said the company dropped the service because it "has not performed as expected." Buxbaum said HP would refocus its investments into other digital entertainment ventures.

Launched in February, Wal-Mart's video download service initially included 3,000 films and television episodes for customers to buy and watch on their computers and in some cases a portable device. However, the movies do not work on standard DVD players or on the market-dominant iPod device from Apple Inc.

Wal-Mart's departure leaves Apple's iTunes store and Amazon.com Inc.'s Unbox service among the options for movie downloads, which haven't garnered as much consumer interest as online music sales. Last month, Time Warner Inc.'s AOL also scrapped its pay-for-download movie service.