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Analyst Loves Walmart’s Disc-to-Digital Service

20 Apr, 2012 By: Erik Gruenwedel

In a result right out of the legendary “He Likes it! Hey, Mikey” cereal commercial from the ’70s, BTIG Research analyst Richard Greenfield test-drove Walmart’s disc-to-digital service — which launched April 16 in 3,500 stores — and said the experience “exceeded” expectations.

Walmart’s disc-to-digital platform enables consumers to bring in their DVDs and convert them for a fee to digital files stored in a cloud-based UltraViolet locker and accessed on compatible consumer electronics devices via the retail behemoth’s Vudu digital media service. The platform can transfer from up to 4,000 studio titles with the exception of Disney and Lionsgate movies (those studios instead are participating with Apple’s iCloud service).

Greenfield, like many Wall Street analysts, had questioned the need for such a service at a time when lower-priced disc rentals flourish at Redbox kiosks and subscription video-on-demand services such as Netflix, Amazon Prime and Hulu Plus proliferate. Specifically, the analyst believed the required trip to a Walmart store coupled with the $2 fee per standard-definition ($5 for HD) transfer (double what he suggested) and probable tech glitches would be a recipe for disaster.

Greenfield took 10 of his own DVDs to a Walmart in New Jersey and then streamed the content through Vudu on both an iPad and a television connected to a PlayStation 3 video game console. The only title he couldn’t transfer was Gladiator.

“We were really impressed with how quickly we were able to register for a new Vudu account (if we didn’t already have one), how quick/easy it was for Walmart employees to verify a title’s availability (for a DVD we had brought in) and most importantly, how fast the content became available in our Vudu account (under 10 minutes, meaning by the time most consumers get home from their trip to the store, the content will be waiting for them),” Greenfield wrote in an April 20 post.

Home Media Magazine senior editor Chris Tribbey conducted the same test drive with his own discs and found similar results. Tech pundit Peter Kafka with AllThingsD.com echoed the sentiment, saying Walmart should be given credit for a digital product that “seemingly” does what it is supposed to do.

Greenfield said the process is “light years” ahead of Warner Bros.’ Flixster platform, enabling access to cloud-based digital files for the studio’s UltraViolet titles.

The analyst said the most time-consuming part of the transaction was filling out the paperwork — a process he hopes can be done online in the future. In addition to the fee — which he believes is counterintuitive to the current consumer mindset for previously-owned content — Greenfield said users should be able to access cloud-based digital storage from home. While understanding the desire for Walmart to bring people into stores and mitigate possible disc sharing, Greenfield said remote access for consumers is vital to long-term support.

“While we appreciate that risk … we believe removing friction from the disc-to-digital process would be a long-term industry positive, especially with consumers already comfortable with ripping music at home,” he wrote.



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