Walmart bought VUDU
The news was on the wire on February 22nd. Wal mart paid 50 Million USD to acquire Vudu.
Vudu movies streams movies to users over their broadband connection directly into TV sets. Users without compatible televisions need to purchase a set-top box.
I believe this is the beginning of a series of retail stores coming into the content & telecom businesses. It is true that Wal Mart currently sells DVDs in-store and Vudu in a way will compete with their existing business.
But Wal Mart is positionning itself as a provider of (among other things) consumer electronics goods. By acquiring Vudu it can now sell/rent movies in TV sets or rent physical DVD.
A view on the subject by Rayburn;
The bottom line for Vudu — and now Walmart — is that there is not currently a business model for an online video distribution service to survive, noted Rayburn.
“Stores haven’t helped them in the past,” he said. “I see it as another failure on their hands.”
The problem is that there are not enough TVs in the marketplace that are connected to the Internet, according to Rayburn.
There will likely be approximately six to seven million Internet-ready TVs sold in the U.S. this year. Among those TVs, only 15-to-20 percent are actually connected to the Internet. If just 20 percent of seven million TVs are connected, that limits the potential audience to a mere 1.4 million customers, he said.
Walmart, however, is looking to the future. As more customers with broadband Internet access purchase Internet-ready TVs or Blu-ray players, they will be able to rent or purchase movies without needing a computer or cable/satellite service.
Vudu’s technology will enable Walmart to offer customers another way to access home entertainment options as they migrate to a Web-based environment.
And I believe Wal Mart will not be the only retailer to go into that space. Big french retailers have these plans. La Fnac already have an agreement with Glowria (owned by netgem) and offer “La Fnac TV box” although the value proposition looks great they do not advertise the service.
I think the next move will come in the UK or in Germany.
As for the Studios, they have hesitated to allow recent releases to be rented from outlets like Netflix and Redbox, for fear of losing profits from DVD sales. Similar fears have kept many movies from making their way into streamable video services, encouraging a vigorous online ecosystem for pirated movies. The answer might lie into better protection system?
