February 23, 2010, 12:00 AM

Wal-Mart to buy a movie-streaming company

Wal-Mart Stores Inc. says it will buy Vudu Inc., which sells technology and services that enable consumers to stream high-definition movies into homes. The move pits the world’s largest retailer against the likes of Netflix and Apple.

Zak Stambor

Managing Editor

Wal-Mart Stores Inc. says it will buy Vudu Inc., which sells technology and services that enable consumers to stream high-definition movies into homes.

The deal, which Wal-Mart says will close within the next few weeks, puts the retailer in closer competition with such companies as Netflix Inc. and Apple Inc., both of which sell digital entertainment. Terms were not disclosed.

Founded in 2004, Vudu will become a wholly owned subsidiary of Wal-Mart, No. 13 in the Internet Retailer Top 500 Guide. Wal-Mart says Vudu’s licensing agreements with studios and distributors enable access to 16,000 movies. Consumers need broadband Internet connections and high-definition TVs or Blu-ray players to rent or buy the movies. Vudu sells boxes that attach to or are built into TVs, enabling access to movies.

"Combining Vudu`s unique digital technology and service with Wal-Mart`s retail expertise and scale will provide customers with unprecedented access to home entertainment options as they migrate to a digital environment,” says Eduardo Castro-Wright, vice chairman for Wal-Mart.

Some analysts Tuesday were skeptical about the acquisition. “The business of streaming is a tough one,” says Sucharita Mulpuru, an e-business analyst for Forrester Research. “It all comes down to who gives you rights to the movies. That said, the studios want as much distribution as possible and don’t want to beholden to Netflix or Amazon or any single player.”

Dmitriy Molchanov, an analyst with the Yankee Group, notes that Wal-Mart is among the largest retailers of DVDs and Blu-ray discs. He says the deal signals that Wal-Mart likely understands that consumers eventually will not buy as many discs as streaming becomes more common. Still, surviving in this space will not be easy, he says. “There is quite a lot of competition.”

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