TakeAway: Wal-mart, Amazon, and Target didn’t want to just lose money on books, they decided to lose money on DVDs too.
The latest price wars to lure consumers during the holidays may cause irreversible long-term damage.
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Excerpted from WSJ, “Online Price War Moves to DVDs As Discounters Compete for Sales,” By Miguel Bustillo and Ann Zimmerman, November 6, 2009
Wal-Mart extended its holiday price war into new territory Thursday by slashing online prices on 10 hotly anticipated DVDs … to $10.
Within hours, Amazon and Target matched some of Wal-Mart’s online prices on pre-orders of the DVDs, and Wal-Mart lowered its price by a penny to $9.99, reprising the scuffle that broke out last month when Wal-Mart launched an aggressive $10 book promotion …
Like the book war … the DVD battle resulted in prices that guaranteed the retailers would lose money on the movies. However, promotions to sell new movie releases close to or below cost in order to drive customer traffic are already common in retailing …
Though Wal-Mart, Amazon and Target always compete feverishly with aggressively priced promotions, the latest skirmishes, heading into a holiday season in which recession-scarred consumers are searching for bargains, have been especially cutthroat.
Despite involving just a handful of titles, the book war aroused strong passions in the publishing industry. Some worried that it would set troublesome new customer expectations on bestseller prices and even affect the amount of future advances publishers could afford to pay writers.
The American Booksellers Association last month asked the Department of Justice to determine if it constituted “illegal predatory pricing,” arguing independent book stores wouldn’t be able to compete.
The book prices were so low that the retailers placed limits on the number of copies customers could purchase.
Edit by TJS
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Full Article
http://online.wsj.com/article/SB20001424052748704013004574518210171023536.html#mod=todays_us_marketplace
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The Homa Files 
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