Wal-Mart is joining the ranks of providers offering home movie services over the Internet. Last week, the retail giant agreed to purchase Vudu, a three-year-old start-up.
Terms of the acquisition were not disclosed, but a person briefed on the deal told the “New York Times” that the price for the company, which raised $60 million in capital, was over $100 million. Other companies, including Best Buy, Amazon.com, Comcast and the satellite company EchoStar, had also reportedly expressed interest in acquiring Vudu.
The two companies began informing Hollywood studios and television manufacturers of the deal last week, and Wal-Mart said it was expected to close within a few weeks. Microsoft, Sony, Amazon, Netflix, Blockbuster and Roxio CinemaNow, a division of Sonic Solutions, all offer online movie stores for Internet-connected devices like HDTVs, Blu-ray players or video game consoles.
“It’s getting increasingly cheap to put Internet connections into televisions, and there are definitely financial opportunities to doing it,” Riddhi Patel, an analyst at the research firm iSuppli, told the newspaper. It estimates that over 60 percent of high-definition televisions will connect to the Internet by 2013.
This shift could shake up the television business, analysts told the “Times.” Consumers will have more reasons to watch entertainment from sources other than their cable or satellite company, potentially motivating a greater fraction of them to cancel those monthly subscriptions.