Wal-Mart Has to Make Digital Downloads Work. Vudu is Step 1

Vudu and Wal-Mart

The Vudu that you do so well

They’ve tried movie and music downloads before, and the world’s largest retailer is about to try it again with Vudu (which some say the retailer paid $100 million for).

Wal-Mart, the biggest seller of physical media — CDs, DVDs — has known for some time that the model is dying. Check out the shrinking shelf space for CDs and DVDs at your local Superstore. It absolutely has to make a splash in downloadable content.

While its previous foray into MP3 sales was an abject failure, movies could be a different story.

If Wal-Mart can sell TVs and Blu-Ray players preloaded with this Vudu app, then they’ve got a fighting chance alongside other services like Netflix, which comes as an included feature for many Blu-Ray players these days, a possibly an advantage over cable on-demand, in that you don’t need a cable connection to receive it — only broadband Internet.

Some analysts see Wal-Mart in an uphill battle:

Phil Leigh, an analyst with Inside Digital Media, an independent research firm in Tampa, argues that Vudu’s offerings of downloadable movies may be too limited.

Why would consumers buy a pricey new TV or DVD player just to gain online access to movies when they can already do that with services from Netflix, Amazon.com and that little company in Cupertino, Calif. named Apple .

“The Vudu acquisition is a realization that TVs and other entertainment appliances need Internet capability. But on the whole, consumers want unlimited access, not just movies. You can already do this with a Mac mini or Windows-based laptop connected to your TV,” Leigh said.

I disagree. I think that for most consumers — particularly Wal-Mart’s bread-and-butter core customer — hooking up a Mac Mini or Windows-based laptop to a TV — to say nothing of using services like Hulu and Boxee — is still too complicated.

An app like Vudu, built right into the new HDTV you just bought for a super-low price at Wal-Mart, seems much easier to use. And with Wal-Mart muscle, you can expect Vudu’s content deals with Hollywood studios to improve.

The next possible challenge for Wal-Mart, then, would be to get broadband Internet access to more of its core customers, many of whom come from rural areas where high-speed Internet access is little more than a rumor. Could we see the world’s largest retailer throwing its weight behind rural broadband initiatives one day?

More

Wal-Mart Picks Up Digital Vudu – What’s next? [BusinessWeek]

Wal-Mart’s Buying Vudu After All [Gizmodo]

Wal-Mart Takes a Swing at Amazon [ArkansasBusiness.com]

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