Wal-Mart buys Vudu

Acquisition is chain store's try at digital film distribution

Wal-Mart is taking another crack at digital film distribution, this time by way of an acquisition of Vudu.

Already the nation's No. 1 seller of DVDs, Wal-Mart said Monday that it was paying an undisclosed sum for Vudu, a 4-year-old company that boasts deals with every major movie studio and 40 independent ones.

Although the companies didn't discuss specific deal terms, published reports have Wal-Mart paying $100 million for Vudu, which reportedly has been operating at a loss with $60 million it has raised from such investors as Benchmark Capital and Greylock Partners.

Wal-Mart has been down this road before. In February 2007, it announced to much fanfare that it was becoming the first major retailer to offer digital movie downloads. That effort, which folded before Year 1, was notable given that Wal-Mart reportedly was upset that other similar initiatives from iTunes would cut into Wal-Mart's huge DVD business.

Wal-Mart also launched a by-mail DVD service meant to compete with Netflix, though it gave up on that initiative as well when it partnered with Netflix.

With Vudu, Wal-Mart competes not only with iTunes and Netflix (again) but also with Blockbuster, TiVo, Amazon and others that provide the ability for consumers to rent or buy movies digitally delivered to TV screens.

Vudu, which recently abandoned its own hardware business, will be embedded into millions of TV sets, cable boxes and other devices this year courtesy of deals with Sanyo, Sharp, Toshiba, Mitsubishi and others.

The company has access to 20,000 titles, 3,000 of which are in HD or HDX, a proprietary system Vudu said is comparable in quality to Blu-ray Disc.

Titles typically are available day-and-date with the DVDs. Renting a movie costs $1.99-$5.99, and purchasing runs $12.99-$19.99 for an unlimited streaming license.
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