News this week that less than twelve months into its existence, Wal-Mart’s video download store has closed (Reuters) comes as no surprise.

In a bid to get all of the major studios on board, while at the same time not compete negatively with Wal-Mart’s traditional DVD sales, the service was plagued by high pricing and a ridiculously large dose of DRM (one Windows-PC only). It was doomed from the start.

Other factors may have also played their part. How many movie watchers actually knew the service even existed? (It fell under our radar when we compared eleven video download stores.) Wal-Mart themselves are also placing some of the blame on their technology partner HP’s decision to end its B2B Video Merchant Services platform (apparently the video download market hasn’t performed as “expected”).

However, looking beyond the Wal-Mart case I think there is a fundamental problem that almost every paid-for video download store faces. Content is king, but to get the content you have to appease the major movie studios. That means giving them what they want – not what consumers want – in terms of pricing, release windows and copy-protection. For years Hollywood has been a well oiled money making machine, with each distribution platform working in tandem to print as much money as possible: theatrical release, rental, DVD sales, and network television — repeated throughout different territories. Until the studios figure out and commit to how digital distribution fits in, video download stores will find themselves between a rock and a hard place.