Wal-Mart hopes a little Vudu will bring the magic back to its movie business
Wal-Mart is acquiring Vudu, which offers a service that allows consumers to stream HD content directly to Internet-enabled HDTVs and Blu-ray players.
The New York Times first reported the deal this morning (Monday, Feb. 22). AllThingsD reports that Vudu’s sale price is approximately $100 million in cash, which the author believes is probably an inflated price, especially considering the company had been shopped for half that.
Vudu offers nearly 16,000 movies for sale or rent, and it also has partnerships with such content providers as Facebook, Flickr, Twitter, the above-mentioned New York Times and The Associated Press.
DVD sales used to be a huge part of Wal-Mart’s business, with the retailer making a point of displaying them at the front of stores to lure customers in to take a look at the rest of the merchandise. Wal-Mart sold the DVDs at a loss, but was such a huge movie mover that everyone else in the industry was forced to follow its pricing lead.
Today, online services such as Netflix, Amazon and iTunes, as well as $1 movie-rental service, Redbox, have radically changed Wal-Mart’s DVD business. For years, it has tried to create its own online movie service, including one with Netflix that Wal-Mart tried to launch with HP. Thus far, customers have ignored these efforts. Wal-Mart hopes that offering Vudu services will attract consumers to its higher-priced, Internet-enabled Blu-ray players andHDTVs.
Long ago, people thought Netflix’s movies-by-mail business would quickly become obsolete, but the company’s CEO Reed Hastings has made some brilliant technological and marketing moves, not only keeping Netflix in business but also building it into the U.S.’ largest online movie service. Netflix already has its own deals in place with consumer electronics manufacturers such as LG and Vizio to direct stream movies to consumers’ Internet-enabled devices. Netflix also works with TiVo and Microsoft XBox to allow consumers to stream movies from their Netflix’ accounts directly to their TVs. Netflix’ established brand name and customer base is going to make it hard to catch.
So hard, that Business Insider says Wal-Mart should have just gone for it and spent the necessary billions to acquire Netflix.