One of America’s largest retailers is getting back in the digital delivery game with their announcement of the acquisition of Santa Clara, CA based content delivery platform VUDU. After pulling the plug on their attempts to get into the digital TV and Movie delivery system in 2007, Walmart representatives feel that now is the right time for this strategic acquisition. Presumably, this is Walmart’s answer to Best Buy’s cooperative effort with Roxio’s CinemaNow offering.
The VUDU service will allow Walmart to brand a digital delivery service providing consumers with on demand access to thousands of movies and TV shows directly to their broadband connected HD TV’s and Blu-ray players. Presumably one of the largest draws for Walmart is VUDU’s licensing deals with just about every major studio, approximately 16,000 available titles, as well as the world’s largest collection of 1080p on-demand video.
“The real winner here is the customer,” said Eduardo Castro-Wright, vice chairman for Walmart. “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.”
And according to Parks Associates’ VP and Principle Analyst Kurt Scherf, “Walmart is re-entering the OTT (over-the-top) market at an opportune time. Parks Associates’ consumer research of online video services indicates that usage from paying users for movie rentals, movie downloads, and TV downloads has doubled between 2008 and 2009.”
Likewise, the folks at Parks Associates project that by 2014, more than 40 percent of revenues for premium online video services will be derived from connected TVs, Blu-ray players, game consoles, and networked digital media set-top boxes (think AppleTV for example). By adding the major online and offline retailer, Walmart could conceivably push the market even further as consumers clamor to the new offering. At least that’s Walmart’s hope.
Now some of you might be wondering why we’re talking about TV shows and Movies on demand? Look at this as a first foray into something that we believe is the next logical step in online gaming. Remember what our good friend David Perry has been preaching (and working on) for quite some time now – gaming in the cloud. If Walmart (and Best Buy) are able to develop and push this technology in such a way that Joe Average consumer ‘gets it’ and regularly consumes it, the question is – how long will it be before Mr. Average starts asking for the same delivery method, just slightly different content, i.e. games?
There’s a huge untapped market waiting to happen if today’s ‘casual’ gamer can and will want to make the swap from a desktop or laptop method of playing their favorite game to that of the living room. Walmart clearly sees the opportunity in the making, as they did in 2007, although they might have been a bit too progressive at the time, and want to cash in. Our best estimate is that this is a staging and testing ground for something much, much bigger.
