updated 02:55 pm EST, Mon February 22, 2010
Walmart would reenter video movie stores
(Update 2: official) Walmart's tenative buyout of VUDU has been sealed, sources discovered on Monday afternoon. A pair of insiders aware of the deal told the NYT that the deals weren't available but that it was part of a return to offering online video services. Neither of the involved companies has agreed to confirm the deal.
An acquisition would mark a very different approach to video for Walmart than in the past. The big-box chain had tried offering a video download service in 2007 but closed it in under a year. Many attribute the failure to Walmart's dependence on Windows Media for the format, which not only came just as Apple was heavily promoting video on the more popular iTunes, iPod and iPhone but also prevented playing video on most any TV-friendly device.
Walmart is still considered one of the largest providers of movie purchases in the US, regardless of format, but has been facing a looming sea change as customers have increasingly veered away from in-store video purchases. Many have turned to either renting physical movies through Netflix or else using Internet video service, such as Netflix's Watch Instantly or iTunes.
VUDU is potentially well-suited to this as it dropped hardware entirely in favor of providing streaming videos to many living room devices, such as Blu-ray players and Internet-connected TVs. A buyout would instantly put Walmart on devices from LG, VIZIO and multiple major vendors.
Update: AllThingsD adds that Walmart may be paying $100 million for VUDU, a very high amount for the company. It also asserts that VUDU's HDX compression was a key part of the deal and "something special" that drew multiple bidders. One of these may have been Cisco.
Update 2: Walmart has confirmed the deal and won't provide the terms of the deal, but says it will take advantage of VUDU's "unique digital technology and service" and apply that to Walmart's sheer size and experience with retail.