Wal-Mart, the largest retailer in the world, is responsible for some 40 percent of DVD sales in the US. And they sell online videos using their (Beta) Wal-Mart Video Downloads portal.

Because of their size, Wal-Mart has just managed to do something that Apple has been trying to do for a long time now: actually get all the major US movie studios to allow it to offer their movies for download. Which means that if you’ve always wanted to take both Spider-Man and the X-Men with you, then this is the way to go.

This is a big blow to Apple. Wal-Mart uses Microsoft’s PlaysForeSure format for its videos (at 320×240 resolution), which means that the movies will only play back on PCs or in mobile devices that use Microsoft’s DRM. iPods not allowed.

Okay, reality check time. On one hand, movie downloads have not really picked up in the realm outside of Apple’s iTunes and, coupled with the fact that most portable video players happen to be iPods in the first place, so the likelihood that people will storm towards other media players in the market because of this development is quite slim for now.

On the other hand, Wal-Mart is a mighty retailing force to recon with (they now have a program where DVD buyers can also download the video versions for just a couple of dollars more). If anybody can turn video downloading into normative behavior, they can be it.

So it’s now turning into a battle between popular consumer device versus popular software retailer. Or in other words, iTunes versus the world. Notice the encirclement strategy that is happening between the PlaysForSure DRM and iTunes. Very Microsofty.

Optimists, however, are bound to spin things around and claim that Wal-Mart’s feat is actually good news for Apple, since Apple can now argue with the studios to give it the same kind of treatment as well (at present, Disney is the only major film company that makes its movies available on iTunes… and only because Steve Jobs is in Disney’s board).

Apple better do that. Or else, all it takes is one really good non-iPod portable media player to upset the balance of power, tipping it towards PlaysForSure devices in general.

But then again, back to our earlier observation: Who watches movies on their portable devices in the first place?

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