New Details on Walmart’s Vudu Purchase

Posted Tue Feb 23, 2010 at 11:50 AM PST by Mike Attebery

Vudu’s press release shines a bit of light on exactly how the Walmart deal is going to go down.

In case you missed the news, the deal between Walmart and Vudu is official. Walmart is picking up the internet video company in an effort to get a foothold in the digital world. It’s all expected to happen within the next few weeks. Once the deal is closed, Vudu will become a Walmart subsidiary.

"The real winner here is the customer," said Walmart vice-chairman Eduardo Castro-Wright. While there are definitely some potential downsides to the sale, Castr-Wright may have a point when he says that “Combining VUDU's unique digital technology and service with Walmart's retail expertise and scale,” will help the consumer in the long run.

There’s a reason Walmart can keep their prices so cheap. It’s not because they pay their employees less or because they sell inferior products, but because they buy millions and millions of products at a time. You’ve seen the bulk rates you can get for paper towels at Costco, now imagine the bulk rate on ten million paper towels.

If Walmart hopes to be successful in the online video marketplace they’ve got to do one of two things: convince consumers that an on demand experience is superior to subscription, or lower prices. With Walmart’s influence and reach, lowering download prices seems like the most likely solution.

One potential downside that hasn’t yet been brought up is Walmart’s desire to control content. The company is despised by many music fans, since Walmart only carries edited versions of CDs. Explicit content is not allowed. They’re looser with DVDs, and don’t seem to have any problem carrying R rated films, but the issue of censorship is a sensitive one.

Source: Vudu

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Tags: VUDU, Walmart, High-Def Retailing, Industry Trends (all tags)