Walmart has been busily trying to implement a digital media strategy as it’s DVD sales cash cow begins to fade. They initially launched a competitive service to Netflix, but gave up on it after a while. We reported earlier that Walmart was looking at Vudu as a potential acquisition target, and apparently that rumor has proven true.

The New York Times reports that the Walmart is buying Vudu, although its unconfirmed by either company at the time of this post. Vudu started off as selling OTT video through set-top-boxes that had to be purchased by consumers. They ditched that effort and moved to a TV apps model, embedding their products in Internet connected TVs, Bluray players, and other devices. They try to differentiate themselves from OTT competitors through their HD offerings.

The move has some ‘synergistic’ value, given Walmart’s position as one of the largest sellers of TVs and other Vudu enabled equipment. It also gives Walmart a position in its competitor’s stores (physical and online), since Vudu enabled devices are sold through Best Buy, Amazon, and Target, to name a few. Best Buy made a similar move with CinemaNow, creating a digital download strategy that Walmart can now compete with.

It will be interesting to watch how Vudu evolves now that they are a part of the behemoth retailer. Will they take Vudu out to try to preserve DVD and Bluray sales? Or will they enhance the offering and make a run at Netflix and iTunes?

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