Monday, February 22, 2010
You start selling the newer product. Or so Wal-Mart thinks.
The retail giant, according to the New York Times, has agreed to buy Vudu, a three-year-old online movie service built into an increasing number of high-definition televisions and Blu-ray players.
Wal-Mart’s move is likely to give a lift to sales of Internet-ready televisions and disc players, which generally cost a few hundred dollars more than devices without such connections. Nor is the move the first attempt by Wal-Mart to figure out a way to make a transition from sales of packaged media to online forms of video consumption.
Wal-Mart dabbled in aq Netflix-style online DVD rental several years ago, but sold the operation to Netflix after getting 100,000 to 250,000 subscribers. Wal-Mart also attempted to get into video rentals with HP in 2007, but it gave up on that project after a year.
The Vudu acquistion would instantly make Wal-Mart a significant force in the video streaming business, and would make the company a direct competitor to Netflix once again.
Vudu initially entered the market with a set-top box that offered access to its video streaming service, but gave up on building its own hardware, and started offering its service as a software offering that could be integrated into other consumer electronic devices.
That might make more sense, as Wal-Mart also now is one of the leading retailers of consumer electronics.
Of course, Wal-Mart also has to position its electronics sales against Best Buy, a major competitor that likewise is working with CinemaNow to enable streaming video services on its own consumer devices.
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