Tuesday News: Wal-Mart intros movie downloads ... Bob Z bolts to Disney ... Diller dips into video

- Wal-Mart is introducing movie downloads today, according to the NY Times and LA Times.

The good: all of the major studios are involved. Also, Wal-Mart customers who purchase a DVD in a store will be able to get the digital version of that movie for an additional $1.97.

The bad: "To avoid running afoul of studios, who want to protect their DVD business, Wal-Mart said the price of a digital movie would be comparable to that of the DVD at its stores," according to the NY Times piece. Wal-Mart and other big retailers don't have any incentive to undercut DVD prices, since even with no profit margin, a DVD sale brings a customer into their store to buy other merchandise; downloads, even with a small profit margin, don't have that effect.

So what will it take to make download prices more reasonable? (By reasonable, I'm thinking around $10, not the $14.88 Wal-Mart charges for recent releases.) Sales of physical DVDs will need to decline (which has been predicted to happen in 2007), making studios more eager to goose the online distribution channel. Indie distributors will need to undercut the studios' pricing on their new releases, proving that lower price points generate more purchases...some Internet download sites will need to continue to experiment with selling some movies below cost, to show that there's demand at lower prices -- and over time, I think everyone will acknowledge that it makes sense to sell a digital product for less than a physical product. Your thoughts?

- It's now official... director Bob Zemeckis is moving his motion-capture animation studio to Disney. (Rumors began circulating last August.) Any live-action pictures Zemeckis makes may be distributed by another studio, though. Here's the Hollywood Reporter coverage...and Variety's piece. Zemeckis' company has been known as ImageMovers -- a new name may be in the offing. Their first three mo-cap movies, "Polar Express," "Monster House," and the upcoming "Beowulf," were distributed by three different studios: Warner Bros., Sony, and Paramount.

- The Wall Street Journal writes about Barry Diller's video strategy: creating inexpensive original content, rather than relying on user-generated content. Jessica Vascellaro writes:

CollegeHumor's expansion into video programming is a harbinger for what Barry Diller's IAC has in store for the rest of its Internet media conglomerate, a portfolio of some 65 brands. While user-generated content, from pet-tricks to video rants, has captured much of the buzz around video online to date, Mr. Diller is betting on a different formula: featuring professionally produced, ad-supported video clips geared toward highly targeted audiences. In addition to kicking off CollegeHumor's original content, Mr. Diller is launching 23/6, a multimedia comedy news site whose name is a spoof on the phrase "24/7." He's also adding original online-only content to HSN.com, the home shopping network Web site.

"With bandwidth penetration being higher, you can use the Internet for more than information retrieval," Mr. Diller says. "Now is absolutely the perfect time to invest in online video. It is just before the deluge."

A typical clip on CollegeHumor.com costs between $500 and $2000 to produce, and takes about a week.