Vudu Lays Off Staff, Hires CFO

25 Aug, 2008 By: Erik Gruenwedel

Broadband movie delivery service Vudu has terminated nearly 20% of its 100-person staff, including former VP of marketing Patrick Cosson, who had served as the Santa Clara, Calif.-based company’s marketing chief.

Vudu, which boasts a library of more than 10,000 studio movies delivered in high-definition through a proprietary set-top box, downplayed the layoffs as a cost of staying competitive in the entertainment food chain.

"It is the normal course of business for fast-growing startups to align resources to meet market opportunities,” said CEO Mark Jung in a statement.

Jung said Vudu would focus on expanding distribution in retail as well as specialty AV partners and on broadening its product offering. He said the service is in fact “aggressively” hiring personnel to support market and product-line expansion.

“We will continue to be aggressive in aligning resources to drive growth and to meet our business objectives,” he said.

To penetrate specialty AV, expand distribution and help rein in spending, Vudu said it hired former eBay financial executive Chris Watts to the position of CFO. Watts will oversee all finance and accounting operations, along with human resources, legal and administrative functions.

“Chris is going to play a critical role in developing financial strategies as we extend our retail presence, deepen relationships with AV resellers across the country, and expand the functionality of [our] e-commerce platform,” Jung said.

Rob Enderle, independent media analyst with Enderle Group in San Jose, Calif., said third-party download services continue to be plagued by limited access to major studio content and competition from cable/DSL/satellite vendors that can subsidize operating costs from well-heeled parent companies.

“It makes it very difficult for anyone else to enter,” Enderle said. “Given [the retail] price is close to cost for the content, I’m not even convinced Apple is making that much money either.”

He said Netflix’s streaming model is working with subscribers (because it’s free), and getting that model to work for downloads remains both a requisite and challenge.

Earlier this month Vudu established a "bargain channel" that allows users to stream a selection of 99 movies for just 99 cents each.