Retail giant Wal-Mart (WMT), long a dominating brick-and-mortar force in American business, is wading into the digital content melee by snapping up web-video startup Vudu, the company said Monday. The purchase for a reported $100 million or so is the latest evidence that the still-nascent market for on-demand video is starting to heat up -- and powerful traditional retailers are starting to take notice.Terms of the deal, which Wal-Mart said will close within the next few weeks, were not disclosed, but AllThingsD put the purchase price at over $100 million. The sale represents an enviable outcome for Vudu, which has struggled since its founding three years ago, as its set-top box failed to catch on with consumers.
Wal-Mart was apparently attracted to the growing number of video component manufacturers that are incorporating Vudu into their products. Last month, at the Consumer Electronics Show in Las Vegas, Vudu said that Samsung, Toshiba, Sharp and others would be integrating its service into flat-screen TVs and other home entertainment components.
"The real winner here is the customer," Eduardo Castro-Wright, vice chairman for Walmart, said in a statement. "Combining Vudu's unique digital technology and service with Walmart's retail expertise and scale will provide customers with unprecedented access to home entertainment options as they migrate to a digital environment."
Attack On Netflix, Apple TV
Wal-Mart touted Vudu's licensing agreements with "every major movie studio and dozens of independent and international distributors to offer approximately 16,000 movies, including the largest 1080p library of video on-demand movies available anywhere."
Wal-Mart's move immediately catapults it into competition with Netflix (NFLX), which has pinned its future on delivering on-demand content to consumers, as well as Apple (AAPL), which is trying to translate its success with the iTunes music store into the video-on-demand market with Apple TV.
For Wal-Mart, a company that sells a huge number of physical DVDs, the Vudu purchase amounts to a hedge against -- and an admission of -- the inevitable decline of that business.
"We are excited about the opportunity to take our company's vision to the next level," Edward Lichty, Vudu executive vice president, said in a statement. "VUDU's services and Apps platform will give Walmart a powerful new vehicle to offer customers the content they want in a way that expands the frontier of quality, value and convenience."
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