World’s largest retailer and the largest employer in the United States, Wal-Mart Stores Inc., quietly canceled its online video download service. Apparently, Hewlett Packard Co discontinued the technology that powered it, according to Walmart.com spokeswoman Amy Colella, quoted by Reuters.

Wal-Mart's service, kickstarted in February, initially offered films from $12.88 to $19.88 and individual TV episodes for $1.96. That's 4 cents less than the iTunes store. Wal-Mart's online store also sold older titles starting at $7.50, compared with the $9.99 charged by iTunes.

Wal-Mart, the leading DVD retailer, used HP's Video Merchant Services system to power the site. Unfortunately, what brought the site down was the fact that Wal-Mart was forced to allow studios to dictate the pricing model. This led to new releases to be priced equally with the physical DVDs. Also, the content was crippled by Windows-only DRM that prevented playback on more than one computer.

Wal-Mart has begun selling DRM-free audio tracks in August in an attempt to make its music download service more attractive to customers. Wal-Mart is currently selling songs in both unprotected MP3 format and DRM-laden WMA format, the difference between the two being registered at the quality of sound and at the price level.

Both companies have started ditching the DRM a while ago, with EMI offering its entire catalogue without the copyright protection in spring 2007. Vivendi’s Universal preferred to test the same pro-customers oriented policy for 6 months and only for a portion of its catalogue, distributing the MP3 files not only through iTunes, but also through RealNetworks’ Rhapsody, Amazon, Google and last, but not least, Wal-Mart’s online store.