26 Comments

Summary:

Wal-Mart is buying over-the-top video company Vudu, according to a report by the New York Times. Apparently talks are already underway with Hollywood studios and television manufacturers. Here’s what else you need to know.

UPDATED: Wal-Mart is buying over-the-top video company Vudu, according to a report by the New York Times. NYT technology writer Brad Stone reports that both companies have started to inform Hollywood studios and TV manufacturers about the deal. Financial details are not available, and a Vudu spokesperson told us he wasn’t able to respond to our request for comment just yet.

The first rumors of Wal-Mart taking over Vudu appeared in early January, and the deal certainly does make sense for the retail giant. Vudu has been busy forging alliances with CE makers and announced deals with Mitsubishi, Sanyo, Sharp, and Toshiba to embed its app platform on their devices in January. This should give Wal-Mart almost instant access to a large part of the consumer electronics market.
Vudu was founded in 2004 and released a set-top box for web-delivered video in 2007, but the product was unable to gain traction despite a retail partnership with Best Buy. Vudu eventually shifted to providing an embeddable platform for CE makers, and finally stopped selling its set-top box this month.

Wal-mart hasn’t had much luck with online video either. The retailer started a movie download service in early 2007, but its efforts were hampered by a limited catalog, DRM restrictions and a lack of options to watch the downloaded content on the big screen. The download service closed shop only months later.

Fast forward to 2010, and the picture looks decidedly different. Connected TVs are set to go mainstream, and Vudu has deals in place that will put its software on TVs or Blu-ray players from seven of the top nine device manufacturers. It’s unclear what the acquisition will mean for these deals, but one could imagine that Wal-Mart would be interested in running Vudu as an independent unit for the time being, if only for the fact that retail competitors like Best Buy might shy away from selling TVs with Wal-Mart branded software.

Either way, the acquisition could put some serious pressure on companies like Roku and Boxee that are providing competing video and app platforms and devices as well as download services like Apple’s iTunes store and Amazon’s VOD service. Our own Ryan Lawler recently summed it up this way when rumors of the acquisition first surfaced:

“No one would be in a better position to own the living room than Wal-mart, the company that could sell you a TV and could also sell you the video you want to watch on the TV.”

UPDATE: Wal-Mart just sent us a press release confirming the acquisition. The company didn’t reveal any numbers, but said that Vudu would become “a wholly-owned subsidiary” of the retailer. It also said that Vudu would continue to develop its app platform.

Peter Kafka is reporting that Wal-Mart is going to spend more than $100 million in cash on Vudu.

  1. Very interesting. It seems like a rather smart choice on Walmart’s behalf. Will be cool to see how this one plays out :-)

    Share
    1. Why would I want to pay extra for an InterNet capable TV or set top box that will only connect to a limited number of fixed web services that the device manufacturer has struck a commercial deal with. How does that represent long term value to the customers.

      OH….RIGHT…. the customer’s interests are of little importance when it come to corporate value chain considerations.

      What ever happened to the old “CUSTOMER IS KING” as the key to forming a long term and thus profitable relationship with your customers?

      I guess we still have to leave that up to Apple. Everybody wants to be the next Apple Killer as long as they don’t have to stoop to Apples level and actually practice any form of “CUSTOMER IS KING” because everybody knows customers are not willing to pay extra for a quality experience, except if you’re Apple. Duh, someone with deep pockets should just go ahead and give it a try, it just might work, their price commoditization approaches certainly have not?

      That leaves me with little other choice, I will just have to waiting untill next year when Apple takes it’s obvious next step and just slaps a version of the iPad’s circuitry right into a Flat Panel TV. That way I will have access to a complete web browser, all web based services including all web video services and a huge array of custom App Store, native App based services. There you go AppleTV – Version-3

      Share
      1. And when did Apple revert back to customer is king? Most customers I know routinely visit several sites done in Flash. Of course emperors (not ordinary kings) are known to wear new clothes :-) and iPad is a fashionable one! /sarcasm

        Yes, it would be cool if Apple went ahead and made a real TV. I’ve always wondered what has held them back.

        You do raise a pertinent point though. The USA market for connected TVs has consciously stayed away from a browser approach. The leaders are playing the exclusivity game – by going for specific apps like the Yahoo widgets, the netflix, the Rhapsody, Rovi etc… whereas on the other side of the atlantic, people are going for browser based TVs. Philips, for example, has browser based TVs in the market for sometime already…with a “walled garden” to start with, but not limiting you from going to the big bad www if you so prefer.

        This is the question that the USA market needs to confront head-on. Why would you want to be limited to vertically integrated apps and services? Why not allow the entire www? Why not simply put a browser in a TV?

        Share
      2. I’LL BE A LITTLE MORE PRECISE FOR YOU

        “YOUR COMPANY’S TARGET CUSTOMER IS KING”

        Life has trade offs for both people and corporations. Apple like all other corporations must pick a tipping point between user-experience/product-control that creates the best balance for their target customer. If you prefer a different balance, fine, choose a different company/product that best fits your preferences.

        I am not stuck on Apple products. It is just very frustrating that all the potential competitors are such chowder heads. They refuse bit the bullet and spend the R&D money required to serve up a well balanced, conscious, customer focused, decision about what user-experience/product-control tipping point would best serves their target customers. If they could manage this simple insight we would all have more competitively priced premium products to chose from.

        So my question is, why do myopic Apple haters, continually attack Apple in defense of others companies/products that have even more offensive lock down trade offs than Apple?

        All of these other set top boxes, internet capable TVs, cable boxes, or satellite boxes all have far more corporate lock down than an iPad circuit base Apple TV solution would have. They are more proprietary and offer far less features. Those TVs brands and set top boxed all have proprietary DRM, far less open access than Apple, most offer no software upgrade path and there is no full web browser in these locked down consumer products. They will not offer a TV industry wide standard runtime environment nor a TV industry wide App Store. Apple may control the App Store but you still have far more choice than these products with no App Store or serious development community.

        As an example my shaw cable box is one of shaw’s new Pace boxes. To enable PVR functionality, I had to purchase a standard external 1GB western digital hard drive costing $150, about $50 more than I could buy it any where else, but you must buy through them or one of their official resellers. You connect it up and phone shaw to activate it. You can not even move this to another one of their own cable boxes in another room to watch a show. Talk abot lock down! No body even questions this stuff.

        Apple must struggle with this complexity of balancing the interests of it’s commercial partners, it’s shareholders and it’s customers. Apple is not a democracy. It is a corporation and like all corporations it’s first priority is to it’s shareholders. This requires that Apple make a business decision and commit to setting a balance or tipping point between
        THE INTERESTS/RIGHTS/FREEDOMS
        OF IT’S INDIVIDUAL DEVELOPERS
        and
        THE INTERESTS/RIGHTS/FREEDOMS
        OF IT’S CUSTOMERS AS A GROUP.
        This tipping point is a corporate judgement call. Each company consciously or unconsciously sets this tipping point. Apple is keenly aware of the importance that this process has on the over all customer experience. Apple has chosen, rightly or wrongly, to set this tipping point where it will be most comfortable and beneficial to the average DIGITAL APPLIANCE consumer. Unfortunately this is out side the comfort zone for most of the, digital geek, gadget loving, pocket protector crowd that frequent these tech blogs.

        AS FOR YOUR FLASH WHINE
        Give it up, flash is dead dead dead, why drag it out! Why is Adobe’s proprietary lock down product worth defending. It is an old bolt-on to the browser bolt-on. They never made a decent effort to maintain it properly across platforms. Why would any other hardware or software company want to be held ransom to Adobe’s monopoly control over their runtime environment. As new variants of hardware and software platforms enter the market place Adobe will hold the fate of these companies hostage. Even if Adobe was making a completely honest effort, their track record suggest they would simply not be able to keep up with their cross platform support in a timely manner. This would slow down innovation and competition, no one benefits from that. I have been slightly disappointed at times with the lock down pivot point on some Apple products, but Adobe, now that is true abuse of customers at every level. I, like others, have been burned by Adobe one to many times. I will never do business with them again. They are very greedy and have absolutely no intention of including their customers or partners in their value equation.

        AS FOR YOUR iPAD SLIGHT
        The iPad is not a computer, it is a VIRTUAL DIGITAL APPLIANCE, it’s design and feature set are targeted with pinpoint accuracy at it’s own unique “CUSTOMER IS KING” market segment. It may or may not take off quickly but the iPad will likely be one of the most successful consumer products of all time.

        visit this HOW TO COMPETE WITH THE iPAD link below for the reasons why
        http://mattgemmell.com/2010/02/05/how-to-compete-with-ipad

        Share
      3. Wow. How is the apple kool aid today?

        Share
  2. Garrett Colburn Monday, February 22, 2010

    Wow! Retailers sure want to get into the services game….Apple redefined everything by blurring the lines between technology manufacturers, consumer brands, brick-and-mortar retailer and content provider. Best Buy and Walmart are catching on and are sure to start launching their own branded devices and expanding their services offerings. Or, if this story is true, partnering with device manufacturers and focusing on UI, content and services.

    Share
  3. Hi,

    Would this be a counter-move on Walmart’s part to Best Buy’s ownership of Napster………..

    Has it seen the decline of DVD so precipitously that it knows it has to move its retail media business completely online immediately?

    Wal-Mart has International operations, yet afaik, Vudu was focused just on the North America market, so what of those rights, risks (lost legacy revenue) and opportunities?

    Vudu never managed to get traction with the direct hardware in the time they gave it, but we know that Wal-mart has direct volume hardware manufacturing capabilities in the cheapest advanced parts of the world, if it could make/contract a $99 Blu-Ray player with built-in Vudu ( and with pre-bundled movies, both of which it could), bye bye Netflix, et al.

    BlockBuster now has its digital assets in place, Amazon, Wal-mart, Best Buy, Apple and even Time-Warner/HBO are getting their ducks in a row, so where does that leave Netflix where the margins are relatively small and it lacks proprietary content or distribution?………..

    Yours kindly,

    Shakir Razak

    Share
  4. This is a very smart move on the part of Walmart. They have the distribution power to sell tens of millions of these boxes and the clout with the studios and content producers to get them to offer their content through the service at a good price. I predict that Walmart will get in both the sales and rental game in the coming year and will offer competition to Netflix, Amazon, and Itunes, among others. In order to effectively compete though, it will not just be about having the service and the content, but also offering a compelling service that goes beyond just movie downloads. Consumers do not want one box for web video, another for movie downloads, as well as a DVR. They need to transform VUDU and go deeper than their current offering. I am sure this is part of their existing strategy. Should be interesting to see how this plays out.

    Share
  5. [...] Wal-Mart is Buying Vudu - NewTeeVee&#10&#87&#97l-Mart to buy video streaming service Vudu - Ven&#116&#117&#114eBeat [...]

    Share
  6. [...] Walmart purchased video streaming company Vudu yesterday. Many believe the move comes as Walmart attempts to increase its streaming video service, an offering which has failed to catch on with consumers. With video downloads and streaming growing every day, the acquisition could make Walmart a premier source for watching content online. [...]

    Share
  7. [...] Walmart purchased video streaming company Vudu yesterday. Many believe the move comes as Walmart attempts to increase its streaming video service, an offering which has failed to catch on with consumers. With video downloads and streaming growing every day, the acquisition could make Walmart a premier source for watching content online. [...]

    Share
  8. [...] through HDTVs, Blu-ray players, and other connected devices. Yesterday’s news that Wal-Mart will acquire Vudu marks just one more step by the major retailers to gain a foothold in the new digital living room, [...]

    Share

Comments have been disabled for this post