Wal-Mart has tried twice to deliver movies and TV shows to its customers. Is it ready to try again?
Maybe. Sources tell me Web video startup Vudu is in “meaningful” acquisition discussions, and industry executives believe Wal-Mart is the likely buyer.
Vudu executives declined to comment. I’ve lobbed a call into the Wal-Mart (WMT) press center but haven’t heard back.
It’s a deal that makes some sense on paper: Vudu is one of many services that gives consumers a chance to rent or buy movies over the Web, but it hasn’t gotten much traction. “It’s a beautiful product and a really great service, in need of distribution,” says a person familiar with the company.
And Wal-Mart has tried video delivery twice before but backed away each time. Acquiring a tech team at the right price could help it make a third effort.
After trying for two years to compete with Netflix’ (NFLX) DVD-by-mail business, Wal-Mart gave up in 2005, and agreed to send its customers directly to Netflix. In 2007, with the backing of all the big studios and tech help from Hewlett-Packard (HPQ), it tried to launch a download service, a la Apple’s iTunes (AAPL). But it abandoned it in less than a year.
Meanwhile, sources say Vudu has been seeking a buyer — in the form of either a big box retailer or an electronics manufacturer – for some time without success. Internet executive Mark Jung ran the company for a year but left in November 2008; founder Alain Rossmann became interim CEO when Jung left and has kept the title since then.
Santa Clara-based Vudu has raised at least $21 million from Benchmark Capital and Greylock Partners. I’m told that when the company was marketing itself last fall, it was looking for a sale price of $50 million or more. But it may not have much leverage to command a premium.
Vudu started out by marketing an Internet-connected box that consumers plugged into their TVs, but that offering seemed to underwhelm customers (as well as All Things D’s Katie Boehret). It is now focused on building that technology directly into TVs, set-top boxes and Blu-ray players, and marketing itself as a Netflix-like service.
The company’s supposed strengths are a video compression technology that makes it feasible to stream movies in high definition, and a peer-to-peer architecture that cuts down the cost of delivering the the large files.
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