Walmart’s the latest entrant in the over-the-top sweepstakes and it could be one of those deals that will be viewed in the future as an important example of my colleague Andrew Frank’s “IP-Dominant-Gene Theory” that applies to all things media.
By acquiring VUDU, Walmart positions itself to be an important intermediary between content providers and consumers who are looking for IP-dominant service offerings which give them the ability to tailor their content experiences.
If any entity is going to be responsible for enabling mainstream consumers to embrace online content offerings, it could be Walmart. For Walmart VUDU is most certainly about the potential for extending its brand relationship to online consumers while also leveraging its CE-device retail partners. If the company can integrate these two areas to create device-service offerings such as Blu-ray players or connected TVs running VUDU’s software, Walmart could have a significant solution that would attract the attention (not all of it good) of telco and cable service providers. It will be interesting to see how the cable companies, in particular, react to this deal.
And the acquisition puts Walmart in the middle of the same emerging market as Apple with its AppleTV/iTunes combo, a raft of of over-the-top boxes such as Roku and the reportedly-soon-to-be-shipping Boxee box, not to mention the XBox and Playstation consoles which boast their own movie and TV show delivery services.
One other reason this deal is good for Walmart? VUDU is coming at a price point that “. . . is not material” to Walmart’s first-quarter earnings. (Of course, when you remember that Walmart’s annual revenue is around $400 billion, it would have to buy the state of California to have a material impact on its earnings.) So, sounds like they got, for them, a reasonable deal on VUDU. (Financial terms of the deal were not disclosed, according to a press release issued by Walmart. VUDU will operate as a subsidiary with the expected close of the deal in a few weeks.)
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