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Walmart.com Wades Into Online Video Stream

Walmart.com Wades Into Online Video Stream

Walmart bought streaming movie service Vudu more than a year ago, but it apparently decided the time was ripe to start offering it on its own website only when Netflix began showing a few chinks in its armor. The integration is something Walmart should have done when it purchased Vudu, suggested eMarketer analyst Paul Verna, and the delay may have been costly.

By Rob Spiegel
07/26/11 12:14 PM PT

Walmart is integrating its video streaming service, Vudu, with its Walmart.com website. Walmart acquired the cloud-based movie service in 2010.

The service lets customers buy or rent movies to be streamed directly from Walmart.com or Vudu.com or from one of 300 Vudu-enabled devices including select HDTVs, Blu-ray players and the PlayStation 3. Walmart.com shoppers will have the option to select movies on discs or in digital formats on the same page.

Vudu currently offers more than 20,000 titles. Movie rental prices range from US$1 to $5.99. Purchases range from $4.99 to $19.99. Vudu will also offer rentals and sales of 3D movies ranging from $3.99 to $19.99. Walmart will offer a daily 99-cent "movie of the day."

Walmart's Vudu supercharge could mean new competition for Netflix. This means another shark in the water, since Amazon has also been beefing up its video-on-demand offering.

Netflix recently announced price hikes in its subscriptions and projected a decreased rate of growth. Given a potentially weakened Netflix, the Vudu launch may be well-timed to take on the rental and streaming giant.

Walmart's Commercial Assault

Walmart is concentrating on delivering multidimensional services to its customers. Vudu is a new and somewhat hip addition to its website.

"Today's announcement is really focused on our customers," Walmart spokesperson Amy Lester told the E-Commerce Times. "At Walmart, one of our key priorities is to provide a continuous channel for our customers and help them shop the way they live their lives today. We are bringing together everything we are -- from our stores, our brand and our footprint -- with the power of the e-commerce and mobile technologies."

This is an opportune time for Walmart to get a foothold in the video-on-demand world, with the Netflix price hike opening the door wider for other players.

"Today's announcement of Vudu streaming at Walmart.com really plays into ours priorities," said Lester. "With Vudu becoming increasingly popular among customers, we're providing them more access to enjoy this digital entertainment experience directly online at Walmart.com. Also, we're very pleased with Vudu's growth since the Walmart acquisition, and have tripled our customer base since Christmas and continue to receive positive feedback from customers."

Too Late?

Putting Vudu on Walmart.com is something the company should have done long ago, suggested Paul Verna, a senior analyst at eMarketer.

"Walmart's decision to integrate Vudu into Walmart's flagship website seems like a knee-jerk reaction to Netflix's current price hike and the ensuing discontent in the Netflix customer base," he told the E-Commerce.

The integration is something Walmart should have done when it purchased Vudu more than a year ago, he said, and the delay may have been costly.

"The service had little brand equity compared with other streaming services -- not to mention Walmart itself," Verna explained, "so there was no point in keeping it separate. Walmart has lost valuable time in waiting until now to assimilate this brand."

What Consumers Want

This is a particularly vulnerable time for Netflix, he observed. Potentially dangerous competition has arisen that could challenge its dominance.

"Its relationships with studios, including Sony and Warner Bros., are frayed -- and many customers are upset over recent changes in its pricing structure. In that light, this is a good time for competing services to gain footing," said Verna.

However, "the only way Vudu -- or any other service, for that matter -- will offer real competition to Netflix will be through pricing, content availability, picture quality, reliability and other real factors that consumers care about," he said.

"By those benchmarks, Vudu does not look like a particularly good value compared with Netflix," Verna concluded. "Walmart's well-established strategy of competing on price has apparently not carried over to the digital side."


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