Target, responsible for about 15 percent of DVD sales, is the latest retailer to express dismay about download deals being made at a better rate; the concern was signaled via a letter from Target President Gregg Steinhafel to major studios late last month, according to the WSJ. Target told the studios it was looking for “a level playing field” and would consider pulling back on the DVD business if the studios don’t ensure it pricing that’s equitable with movie-download services. Keep in mind that when Target sells DVDs at low prices, it’s usually as a loss leader and in most cases is paying a significantly higher wholesale rate than download services. On the other hand, DVDs cost more to produce and package than downloads.
Target hasn’t gone as far as Wal-Mart, which held back for a time on DVD sales of Disney’s “High School Musical” to show its displeasure with the movie being made available at iTunes for $9.99 (roughly half the DVD price) and sent a top exec to Hollywood to express dismay directly. Target also differes from Wal-Mart on digital strategy; while the latter could announce a download service soon, Target has no immediate plans for digital distribution.
Related: Apple and Wal-Mart In Talks Over Movie Download Revenue Share; Studios Wait Until Q4 End