Channel conflict: Target warns Hollywood on DVDs

Reportedly, Target has warned movie producers that if they give better terms on downloadable movies, Target will respond by cutting shelf space and promotion.

Target sent a letter to large film producers last month stating that it wants "a level playing field" when it comes to movie pricing, according to the report. The Minneapolis-based discount retailer said it might reduce DVD shelf space and marketing efforts if online services get better deals.

Wal-Mart and Target (who between them account for more than half the DVDs sold in the US) are apparently upset about a deal between Apple and Disney (the Steve Jobs connection) giving iTunes the right to sell Disney films for $12.99.

Could get interesting.