Wal-Mart will be first to take advantage of Hewlett-Packard's new Video Merchant Service when it goes live with its very own digital movie and TV download site. The first brick and mortar retail store to offer the services, the new site will be in direct competition with downloading services from the likes of Amazon.com and Apple iTunes. Ready to offer more than 3,000 TV and cinematic titles, Wal-Mart will be partnering with all of the six major Hollywood studios — Walt Disney, Warner Brothers, Paramount, Sony, 20th Century Fox and Universal; iTunes currently partners only with Disney and Paramount. TV content from ABC, CBS or NBC will not initially be offered though Wal-Mart soon hopes to. Another strategy being employed by the nation's largest retailer will be undercutting current digital download prices; for example, individual TV episodes are available for $1.96 — 4 cents less than Apple Inc.'s iTunes store.

Sources: NY Times, Wall Street Journal, Business Week
Commentary: Wal-Mart To Launch Movie Downloads in 2007, Amazon's New Movie Service No Threat to Apple - SeekingAlpha, Amazon Unbox : A Little Too Far Ahead of its Time
Stocks/ETFs to watch: Wal-Mart (WMT), Hwelett-Packard (HPQ). Competitors: Apple (AAPL), Amazon (AMZN). ETFs: ML Retail HOLDRS ETF (RTH), Internet Architecture HOLDRS (IAH),

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