Wal-Mart Buys Vudu, Plays Catch-Up in the Streaming Race

Last Updated Feb 23, 2010 11:13 AM EST

Wal-Mart is purchasing battered online movie platform Vudu, a limp attempt to enter an already crowded video-on-demand market. You'd figure Wal-Mart would be wise enough not to use Best Buy as a role model.

From the New York Times:

The retail giant said on Monday that it had agreed to buy Vudu, a Silicon Valley start-up whose three-year-old online movie service is being built into an increasing number of televisions and Blu-ray players.

Terms of the acquisition were not disclosed, but a person briefed on the deal said the price for the company, which raised $60 million in capital, was over $100 million. Other companies, including Best Buy, Amazon.com, Comcast and the satellite company EchoStar, had also expressed interest in acquiring Vudu, according to this person, who asked for anonymity because the terms of the deal were private.

The two companies began informing Hollywood studios and television manufacturers of the deal on Monday, and Wal-Mart said it was expected to close within a few weeks.


One person who has been briefed on Wal-Mart's thinking said that the retailer would keep the Vudu brand.

But the retailer will make one change. Vudu also has a plentiful selection of pornographic movies available to its customers. A person briefed on the Wal-Mart deal said the retailer would close down that category "immediately."

A censored Netflix? It is Wal-Mart, after all -- and it isn't enough to set up age verifiers or give the consumer choice, but to eliminate any potentially offensive content whatsoever. Urban dwellers may guffaw -- and I did at first, too -- but the rural Wal-Mart audience has a more conservative view on cultural expression. In other words, it could be just what the audience eventually wants.

The problem will be getting Vudu to the actual customers. Vudu currently is available through high-priced, Internet enabled televisions, or through broadband online -- not exactly the norm for Wal-Mart's dial-up households. According to a recent Pew Research Study, less than half of the adults in rural America have high-speed internet at home. What about the tech-savvy rural kids? If they're on broadband, they're getting their movies online through bootleg sites, YouTube rips and Xbox 360 and PlayStation 3 video downloads.

So what's the Wal-Mart audience for Vudu? Says the New York Times:

More immediate, if Wal-Mart puts its marketing power behind the Vudu service, it could give a lift to sales of Internet-ready televisions and disc players, which generally cost a few hundred dollars more than devices without such capabilities.


The Vudu deal could allow Wal-Mart to one day sell a variety of other merchandise through people's televisions via the Vudu service.

One day, indeed. And with the previously botched digital movie efforts with Hewlett-Packard and its own sorry MP3 service, it's doubtful Wal-Mart has an audience eager to rush headlong into the future.


Photo courtesy of ~Kitty