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Walmart (WMT), after several semi-successful attempts at selling digital entertainment content, appears to be making its biggest bet yet: the purchase of high-definition content provider Vudu. Vudu sold equipment for a while, but stopped last year as it dug deeper into making its content available on many newer STB (set-top boxes) instead, such as Blu-ray disc players.Walmart's investment in an online-only movie download provider signals that it knows the days of DVDs being a huge cash cow are slowly coming to and end. It will still be many years before DVD sales start trickling down in a large way, and Wal-Mart knows it needs to have a solidified online movie distribution strategy in place by then. Although Vudu was previously mostly known to early adopters who prefer iTunes and online video over Redbox and DVD sales, that name will probably become household with Walmart at its side.
This is a way, of course, for Walmart to get into as many living rooms and media rooms as possible. Vudu's high-definition movie download/viewing experience is pretty top-notch (I've seen it -- very slick), and it's being built into more and more pieces of equipment by multiple manufacturers. Will Walmart use the Vudu acquisition to bring its weight to bear against DVD rental pioneer Netflix (NFLX)?
You bet. Netflix's Reed Hastings saw the future of embedding access into devices and using the internet to get content to customers before most -- while at the same time becoming the largest DVD rental service in the U.S. Walmart apparently has the same vision now, albeit years later than Netflix. One has to wonder if Netflix and Walmart will become the two large movie distribution competitors in the home entertainment space within five years.
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Reader Comments (Page 1 of 1)
2-24-2010 @ 2:11PM
numerwan said...
Why would Netflix cringe? Netflix is "all you can eat" model as compared to renting videos on a per movie basis... If you wanted to do that you can use itunes or amazon... Lots of STBs and TVs have included Amazon VoD and netflix... Vudu is only recently getting loaded into Vizios
But why should netflix cringe? Unless the price is right with $1 rentals, netflix shouldnt really care, and neither should investors...
2-24-2010 @ 2:11PM
John Huckleberry said...
While the story is interesting it does nothing to remind investors or the viewing public that with in the next five years television, pay movie channels and pay per view will all be live on the Internet just as they are on cable. With hundreds if not thousands of channel choices. How do I know? I'm John Huckleberry CEO of Hollywood Tonight LLC. We've three such networks coming online thru 2012. Walmart's Vudu will be just another bleep on the net by than.