Wal-Mart banks on Internet-ready TV market by acquiring VUDU

Internet-ready TV sets are arguably still in their nascent stage, but Wal-Mart's move to acquire Silicon Valley-based online video provider VUDU could take the service off the PC and into the consumer's living room. Although financial terms of the deal were not revealed, some reports estimate that Wal-Mart shelled out $100 million for VUDU.  

The retailer's purchase of VUDU will likely facilitate greater integration of online video capabilities into HDTV sets and other devices it sells. At the same time, VUDU has resonated with some service providers that aren't interested in building out their own IPTV network, but would like to offer entertainment over their existing broadband network connections. Service providers looking to couple their broadband connections with online video could turn to VUDU, which has already done the heavy lifting of establishing agreements with various TV and Hollywood movie studios.

But it appears that Wal-Mart wasn't the only one interested in VUDU's wares. A Wall Street Journal blog post suggests that Cisco was considering buying the company for its video compression technology--driving up the price of VUDU. When rumors of a sale to Wal-Mart emerged last month, VUDU apparently wanted $50 million--a price that many industry watchers also thought was far too expensive.

Of course, as suggested in FierceTelecom's sister publication FierceIPTV, a number of obvious questions remain. Wal-Mart's previous online video play ended in 2007 when customers did not fully embrace it. Will the same fate befall this latest agreement? And then will Wal-Mart honor the service provider partnerships that VUDU established prior to the deal or just abandon them so it could sell Internet-enabled TVs directly consumers themselves?

For more:
- see New York Times' coverage here
- LightReading also has this take

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