One of the more interesting bits of news this week was the sale of VUDU to Walmart. VUDU has been around for a few years, first as set top box vendor offering movie rentals and purchases and more recently as a service that’s been enabled in some TV sets and Blue Ray players. I think it’s a good deal for the VUDU folks, assuming they got a nice exit. It was hard for me to see where they could take this long term. The dedicated box was expensive and was a essentially a one trick wonder, with other boxes doing the trick much better.
The latest offering gets rid of the box entirely and the VUDU service is a streamed only service for rental and purchase. The good news is there’s no subscription fee for the using it. The bad news, is there’s little on the rental side that isn’t available elsewhere and the purchase model makes little sense as there’s little to no discount against disk purchase for new titles. While VUDU has done a good job of closing the release windows so they closer match day/date of DVD/BluRay that applies only to purchases and not to rentals.
Unlike other services such as iTunes, purchased content is locked entirely on to one screen. In an age of digital ubiquity and three screens and a cloud, that feels way too much like 2004 for me.
The real question is what will WalMart do with VUDU? We’ve seen the plays before, most notably Best Buy’s acquisition of Napster, which hasn’t really led to much. Worse, VUDU isn’t as much of a service or a product anymore as much as it’s a feature that’s going be licensed into other products, something WalMart has shown no ability to do. It’s one thing for retailers to tie into digital distribution but this looks like the wrong service, sold to the wrong company at the wrong time. Walmart has already tried getting into the video download business and got out of it in 2007. I’m not sure I this faring much better long term.