This morning, various sources indicated that retail giant Wal-Mart is dropping UMD altogether. Wal-Mart representatives speaking to the Hollywood Reporter would not confirm those rumors, but followups to individual store locations revealed greatly reduced inventory. Perhaps more damning, however, are the comments coming from studio heads. "It's awful. Sales are near zilch," said a Universal executive. "It's another Sony bomb -- like Blu-ray." A fundamental part of Sony's next generation strategy is to use PlayStation 3, PSP, storage format Blu-Ray, the HDTV market (in which Sony has a significant stake), and Sony's vast amount of music and movie content all as mutually supporting elements to drive sales of one another.

A Paramount spokeswoman was diplomatic about the situation, stating that the studio would continue to evaluate which films fit the UMD format. A Paramount executive was a bit more candid. "Releasing titles on UMD is the exception rather than the rule," he said. "No one's even breaking even on them." Another unnamed major studio president said, "No one's watching movies on PSP. It's a game player, period." One of the most frequent criticms of the PSP by gamers is that, aside from a few standout titles, the system has been slow in generating original high-quality games. Of course, the reality is that quite a few people are in fact watching movies on PSP. However, most of them are not buying the UMDs, which frequently run as much or more than full scale DVDs, but generally do not contain extra features such as commentary tracks or additional footage. Rather, many users compress movies ripped from DVDs (or obtained by other means) and copy them onto PSP-supported Memory Sticks.

Sony has a mixed history when it comes to introducing new storage formats. Its upcoming Blu-ray seems significantly better positioned than UMD, a format that was rather ill-conceived and improperly supported from the start; this may not be seen as a good sign by its Blu-ray studio partners. The company is currently trying to save the format by developing a peripheral allowing users to watch UMDs on a full-sized television set via PSP, but it remains to be seen whether that will be enough.