Walmart bought OTT provider Vudu back in 2010, in what many analysts thought was a hedge against slowing physical DVD sales. After all Walmart was/is the biggest seller of the discs and the growing trend of digital delivery of media threatens that ‘gravy train.’
Walmart continues developing its OTT strategy with news today that it has completed integration of Vudu into Walmart.com. Customers can now rent or buy Vudu releases directly from the website of the globe’s largest retailer.
“This integration allows us to introduce more Walmart.com customers to digital entertainment and give them access to thousands of new release and popular movie titles immediately through VUDU’s high-quality streaming service,” said Edward Lichty, general manager, VUDU in a Walmart 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.”
In addition to the new Walmart.com presence, Vudu offers a ‘store’ of its own through its website, but also has several channels across consumer electronic devices including connected TVs and game systems. The service allows customers to rent or buy video titles for delivery over the Internet and has tried to differentiate itself by offering high quality 1080p HD content.
The move illustrates the growing competitive field in OTT video delivery. With that in mind, is it a coincidence that Walmart was able to announce this move right in the middle of the Netflix rate hike controversy? Maybe, but I view Amazon as a more natural competitor to Vudu than Netflix.
Both Amazon and Vudu are transactional OTT services, allowing the purchase of movies and/or rental of VOD titles, rather than a subscription service like Netflix. Netflix and Hulu seem to be the more natural competitors, although all of these services are vying for consumer’s digital media dollars, just with different market approaches.
What I find most interesting about Walmart and their Vudu brand is Walmart’s potential impact on the future of this business. As is the case with most video offers, what’s most important is access to content. Walmart is not some ‘fly-by-night’ player. Rather, they are the largest retailer in the world and the largest seller of physical entertainment media. If they really begin to get serious about Vudu, and position it over time as their main channel for entertainment media sales, will they be able to leverage their significant market power over in the digital world and give Vudu some competitive advantage with content deals?
They may find more willing partners in media conglomerates like Disney and Time Warner to distribute their high value content. Vudu could be seen as the digital channel for Walmart, an historical retail partner for the sale of their content (and lots of it), and less of a perceived threat from those conglomerate’s other partners – multichannel video providers like Comcast, DirecTV, and Verizon. Netflix on the other hand, is seen as a growing competitive threat to video service providers.