Steve Jobs has been working for months, schmoozing with the Hollywood elite, to get studios to sign on with Apple. Jobs did get Disney on board, but then again Apple does have a bit of a stake over there, what with the owning of Pixar. So, it should be no surprise that a deal has finally been struck between some major studios and a download site. Unfortunately for Apple, they have yet to secure that deal. In a surprising, and aggressive, move Wal-Mart has secured a deal with Disney, Warner Bros., Paramount, Sony, 20th Century Fox, and Universal.

According to the NY Times Wal-Mart will offer digital downloads of movies the day of DVD release. Priced between $12.88 and $19.88, they are comparable to what you pay for a DVD. Which kind of defeats the purpose. Would you want to pay the same price when you’re not getting an actual DVD? Wal-Mart may have a workaround for that. They are considering discounts for people who buy both. That would work by a consumer purchasing say Borat on DVD, then a lower quality “portable” version could be downloaded for $1.97 and a near DVD quality version for $2.97. TV shows will also be available, with the listing provided being all Viacom networks (MTV, Comedy Central, FX, et al). Wal-Mart is working on a deal with the other networks.

With DVR’s becoming increasingly popular and consumers choosing to integrate their PC into the home theater system, online digital distribution is becoming more viable for movies and TV shows. Currently the majority of people watch downloaded videos (legal or illegal) on their PC, but that is slowly changing. Wal-Mart is the only online retailer offering a deal with six major studios, giving them a major advantage.

Wal-Mart previously attempted to compete with Netflix for online DVD distribution, but eventually closed that project down and referred customers to Netflix. The retail juggernaut currently accounts for nearly 40% of DVD sales in America, whether that translates to online will be revealed as the HP designed site goes live in the near future.

The gadget freaks over at Gizmodo spoke with Wal-Mart and got some details on what we can expect. The news is not reassuring. The PC downloads will be “near DVD quality” and the “portable” version will be of a much lesser quality for quick download and viewing on an iPod or Zen. This might be acceptable to the general public, but it certainly isn't worth the price of admission for anyone who's been waiting for digital distribution to become mainstream. With HD-DVD and Blu-Ray running full tilt, the market for low grade downloads is waning. Plus, I can get blurry copies of 'MTV Cribs' on a peer-to-peer network for free.

The pricing was set by the studios, not Wal-Mart, and is a major reason why Apple has been unsuccessful in getting studios to sign on. Jobs isn’t willing to give them that kind of deal. But this is exactly how Wal-Mart became a DVD powerhouse. They hope to bring their strategy of selling to the middle class online, where you normally find the tech savvy venturing long before the general public.

Check out Wal-Mart’s online Video Download site here.

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