• by Gavin O'Malley  @mp_gavin, December 31, 2007

Less than a year since its launch, Wal-Mart has scrapped its online video download service.

In February, Wal-Mart became the first major retailer to align with the major Hollywood movie studios and TV networks to offer consumers downloads the same day that titles were released on DVD.

Its online video venture was expected by some to popularize video downloading among the mainstream. The decision to end its downloading operation resulted from Hewlett-Packard discontinuing the technology that powered the service.

Wal-Mart will continue to offer physical DVDs for sale at its stores and online. Videos purchased on Walmart.com can be played using the Microsoft Windows Media Player or the Wal-Mart Video Download Manager, but cannot be transferred to other computers.

In another blow to Wal-Mart, News Corp.'s Twentieth Century Fox last week reportedly reached a deal with Apple to offer the first movies for rental at the iTunes store.

Late last year, Wal-Mart objected to Walt Disney's decision to sell movies on Apple's iTunes music store below standard retail prices.

Download sales equaled about 1% of the $24.5 billion in DVD and home video sales and rentals in the last year, and are expected to reach 10% within ten years.