vuduThe rumor ‘du jour’ circulating the blogosphere is WalMart may be pursuing Vudu as an acquisition target. Vudu is an online provider of video, including over 3,000 HD movies. Vudu competes with NetFlix, although they don’t offer a subscription model. They rent their titles. Their current strategy is to embed their platform in consumer electronics, including Internet ready TVs and Bluray/DVD players.

Rumors aside, it makes sense for Walmart to be pursuing online distribution of video. They’re currently the number one retailer of physical DVDs. But most realize the writing on the wall concerning physical media – it’s in decline, while electronic media distribution is on the rise.

Walmart has already witnessed these trends first hand. They were the number one seller of music through physical CD sales. They recently lost that title to Apple though, thanks to iTunes. They need to start hedging the bets regarding video sales, or someone like Netflix may pass them next.

Walmart has tried to go down this road before. They’ve launched a couple of electronic media efforts of their own, all of which have failed. Is Vudu the answer? Regardless of whether Walmart buys the capability or builds it themselves, they will be in the business of delivering video and entertainment products online. That move will have implications for service providers who are trying to do the same.

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