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Walmart to Buy Vudu

March 1, 2010 | Author: Ibex Marketing

I don’t know about you, but there are too many similar names floating around in our business. Look, I realize that it’s difficult to come up with an original and compelling name for a new company or service, but now we’ve got Vudu, Hulu, Roku, and Lulu. Is it any wonder that people get confused? In any case, today’s topic is Vudu, a company that sells and rents movies — including HD and HDX titles — and delivers them online. It is similar to Roxio’s CinemaNow and Amazon’s Video on Demand service.

Only there’s one big difference; Walmart is buying Vudu. The giant retailer has tried and failed to get a toehold in the online movie delivery business, but two weeks ago it was revealed that it’s buying an established company to jump start its efforts. DVD sales are not growing as planned, and Walmart has cut back on the display space allocated to DVDs in its stores. Vudu support is already built into a number of NetTV models (TVs with network connections) from various manufacturers, and some Blu-ray players also support the service. According to the Vudu press release announcing the deal, Walmart also gets licensing agreements with almost every major movie studio. Vudu has distribution rights to about 16,000 movies, “including the largest 1080p library of video on-demand movies available anywhere.”

The implications are huge. Walmart may be the only company big enough to challenge the Netflix juggernaut which is positioned to dominate the streaming movie and TV show business. If Walmart decides to offer a subscription model similar to Netflix, however, the real losers might the cable, satellite, and phone company subscription TV services. Most consumers can get free local stations over the air, and in far better quality than the over-compressed signals provided by many cable companies. If Walmart provides access to the premium content that many people want, but at a price lower than the other subscription services, it could have an enormous impact on the whole video distribution landscape.

On the other hand, Walmart may choose to retain Vudu’s current rent/buy fee-per-title model, which will probably limit its impact. We won’t know for a while which direction Walmart will take the service, but it has the potential to be a real game changer.