Walmart to Purchase VUDU

Parks Associates research indicates U.S. premium video rentals and downloads will grow to $8.4 billion in 2014

After abandoning its initial online video plans in late 2007, Walmart has returned to this market with the announced acquisition of VUDU on February 22. With Best Buy working with Roxio CinemaNow, will Walmart leverage the VUDU acquisition to develop its own branded connected CE products?

Walmart is re-entering the OTT (over-the-top) market at an opportune time. Parks Associates forecasts that revenues for premium video rentals and downloads in the U.S. will grow from $2.3 billion in 2010 to $8.4 billion in 2014.

Given VUDU’s recent efforts to transition from a hardware vendor providing set-top boxes to a backend service provider of OTT content for connected CE devices, Parks Associates believes that this acquisition is an opportunity for Walmart to become a “category catalyst” in connected consumer electronics. VUDU currently is working with such CE vendors as LG, Mitsubishi, Samsung, SANYO, Sharp, Toshiba, and VIZIO.

Parks Associates projects that by 2014, more than 40% of transactional revenues for premium online video services will be through connected devices such as connected TVs, Blu-ray players, game consoles, and networked digital media set-top boxes. The presence of Walmart, with its retail muscle now in the online video space, could mean significant growth in the number and availability of Web-enabled consumer electronics products.