By : Erik Gruenwedel | Posted: 12 Jan 2010
egruenwedel@questex.com

Representatives from Wal-Mart and Vudu declined comment about online reports that suggested the retail behemoth was eying the video-on-demand service in a return to digital distribution of movies.

Wal-Mart shuttered a movie download service just 10 months after launch in 2007. An earlier online DVD rental service met a similar fate; its subscribers re-directed to Netflix.

Merger talk was prompted in part by escalation at the Consumer Electronics Show in Las Vegas of back-end technologies earmarked to connect Internet-based entertainment to the television, Blu-ray Disc player and related devices.

Indeed, Vudu announced it was moving away from a set-top box and repositioning itself as software app for third-party CE manufacturers.

“At this point, our future is entirely focused on embedded devices,” said spokesperson David Speiser.

Nonetheless, independent analyst Rob Enderle said he could envision Wal-Mart using Vudu as a marketing tool to drive in-store traffic toward DVD and Blu-ray Disc, while generating ad-supported incremental streaming revenue.

Enderle believes Wal-Mart could re-create Netflix’s popular streaming service and offer superior content due to its strong studio-supported physical sellthrough business.

“This might make sense depending on how [Wal-Mart] marketed the service to consumers and studios,” Enderle said.
 

---