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[12 comments]

Walmart Uses Vudu

July 27, 2011

Netflix is having its problems, following its recent subscription rate increases. Blockbuster continues to struggle. Apple is a monster in the digital space and Amazon is looking to grab share. Right now, it's probably safe to say the video sales and rental business is in a state of flux.

Enter Walmart ... again. The retailer has announced that it is integrating its Vudu movie streaming service on Walmart.com. Now, customers will have the option of going to the site and purchasing or renting video titles in both disk and digital formats.

"One of our key priorities is to provide a continuous channel for our customers, from our stores to our powerful e-commerce and social media platforms," said Steve Nave, SVP and general manager, Walmart.com, in a press release.

"By incorporating digital movie content into the Walmart.com entertainment shopping experience, we're enabling customers to easily choose how they want to enjoy their entertainment content -- whether that be through a physical DVD, digital streaming or both," said Edward Lichty, general manager, Vudu.

One possible piece of bad news for consumers, according to Reuters, is that consumers will need a Vudu-supported device to stream movies in high definition. Walmart.com and Vudu.com stream movies in standard definition.

Arash Amel, digital media research director for IHS, told the Los Angeles Times that Walmart and Vudu have a long climb ahead with Apple's iTunes "accounting for approximately 65 percent of all movies and TV shows bought or rented over the Internet."

According to Mr. Amel, "The real strategic significance" for Walmart is "trying to once more figure out how online video can add any meaningful value to the e-commerce components of its core business of physical goods."

FINANCIALS:     [NYSE:WMT]

Discussion Questions:

Discussion Questions: Do you see the Vudu integration as evidence that Walmart is catching up with other competitors in terms of its digital operations? Will Walmart become a much bigger player in the video sales and rental business?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How important an indicator is Walmart's Vudu integration that the company is catching up with others in terms of its digital operations?

Comments:

Vudu isn't likely to compete with Netflix or other services anytime soon--especially given the constraints mentioned in the article. However, it will probably appeal to a certain segment of the population, giving them access to streaming media. These folks are the ones who might not have attained access otherwise, not the ones who are parsing the differences between HD on-demand, Netflix and Hulu.

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Liz Crawford, VP, Strategy & Insights, Match Drive

I struggle to see how Walmart will compete with Amazon and Apple iTunes, not to mention others like Google and Microsoft that may also aggressively compete in this arena. The best move for Walmart and other brick and mortar retailers is to partner with one or more of the leaders and private label the solution. I can only assume Apple's iTunes would not be open to that, but Amazon, Google or Microsoft may be since it would give them a boost in acceptance of their solution.

Focus on what you do best and partner with the best in areas you currently don't compete.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

"Catching up" will happen when customers actually buy into the concept, not just that it is part of the offering.

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Paula Rosenblum, Managing Partner, RSR Research

Walmart is trying to stop the digital bleeding. Unfortunately, the competition is very stiff and the playing-field (the digital marketplace) is not truly one of Walmart's core competencies (which is more procurement and logistics). I suspect the product will appeal to Walmart's most loyal customers but I doubt it will have much of an impact overall.

Fabien Tiburce, CEO, Compliantia, Retail Audit & Task Management Software

Walmart will continue to enter into any industry it can make a buck on, using their huge leverage to strike a deal, with someone to provide a service for their customers, at a ridiculously low entry price. If it doesn't work, the investment is minimal, and they get out of it quickly.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Great move by Walmart. This is the right move to make, especially as more devices are able to stream live movies and the cost of this becomes smaller, Walmart can use its share of pocket and share of eyeballs to grow their business in a new--and better--market!

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Kai Clarke, President, Kowa Optimed, Inc.

What is fascinating here is seeing how Walmart must view this as strategic and how it places them into competition with others who are ahead of them (Walmart is not used to being #3). This reminds me of Andy Grove's book about strategic inflection points and the way you can tell you are at one is when your competitors change. Attention Walmart: like a Yankee-Red Sox game, no lead is safe! Their position as the most dominant retailer must be continuously defended with visionary leadership.

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Joel Rubinson, President, Rubinson Partners, Inc.

Walmart has already committed to be the #1 internet retailer in the world. This is just another piece of the puzzle to pry users away from the online competition and to discover walmart.com.

Walmart is committed to growing their business. And, they don't define their business as the thousands of retail stores they run. In fact, their mindset is not of a retailer, but as they define themselves "we are in the distribution business."

Walmart is visionary and their objective is to do commerce with consumers where the consumers are.

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Gene Detroyer, Professor, Independent

Walmart has its customer base and it is, for the most part, hugely loyal. I see this as Walmart taking some business from the competitors who are currently searching for their own identity; but not enough to push the profit needle either way.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Walmart is simply buying into profitable markets and getting rid of slow movers. This is the first rule of retail.

'gjarnoldjr'

Let's not overlook the issue of the tightening availability of digital bandwidth for use with streaming big fat movie files. The enormously successful marketing promotions for smart devices, tablets, and unwired notebooks for use in viewing streaming movies is causing huge chunks of telecommunication network bandwidth to be appropriated for these services. Solutions are underway including government reassignment of bandwidth from other carriers such a radio, and technology developments for squeezing more bitrate into less bandwidth (the bitstream), but are not yet fully available. In other words, the more we bump up against the bandwidth limits, the more the carriers charge us, the slower the delivery, and the more customers become dissatisfied with performance. Check out this article: http://blogs.computerworld.com/wireless_bandwidth.

With their new Vudu movie streaming service, Walmart will be impeded by more than just competitors. The technology itself is bound to limit them.

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

This integration gives Walmart a little foothold in this market and a better platform for future endeavors. And Walmart has proved it can compete in just about any market using its outlets, vendor relationships, and, in this case, web presence, to its advantage. Lots of opportunity for Walmart to package a promo offer of Vudu with the purchase of any electronic device they sell to help build digital sales.

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Larry Negrich, Vice President, Marketing, nGage Labs

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