Walmart may be getting ready to take Vudu to the returns counter. The retail titan is now pondering a sale of the on-demand video service it bought in 2010, The Information reported Wednesday in a post citing “people familiar with the situation.”
Walmart did not respond to a request for comment sent Friday; it told The Information that while it’s always willing to talk to possible partners, it won’t share details about those conversations.
“We believe it’s been eying [an] exit for some time,” emailed Michael Greeson, president and director of research at The Diffusion Group (who noted that he earlier worked with the startup that created Vudu). “It just came to a head with the buildup surrounding the launch of the next wave of SVOD services.”
TV[R]EV co-founder and lead analyst Alan Wolk concurred. “It has not gotten much traction and with the Flixcopalypse upon us; it’s going to be even tougher to break through,” he wrote in an email to FierceVideo. “Plus, it doesn’t seem to be of much value to them—it’s not driving any new business or changing/improving their brand image, and if they’re losing money on it, I can’t think of much reason not to sell.”
Greeson said that between putting significantly more money into making Vudu more competitive or selling it off, “the latter option just makes more sense.”
Brett Sappington, senior research director and principal analyst at Parks Associates, added that the transactional market for video, Vudu’s core business, has begun eroding as movie studios no longer hold titles away from streaming rights after theatrical release. “Services are starting to buy up the rights for that early window—essentially making it go direct from the theater to streaming,” he said.
But while Walmart’s potential interest in unloading Vudu might be clear, the three analysts weren’t so sure who would want to buy it.
“I would be curious if maybe another retailer might be interested,” Sappington said. “Target is the one everyone’s going to mention first.”
Wolk suggested one of the free ad-supported streaming TV services might be interested: “Vudu’s current movies require payment, which would give whomever buys Vudu credit card information from users that they could then add to their database as a way to sell ads and determine attribution.”
Greeson, in turn, said another TV-on-demand service might bite at the right price: “I’m less certain of who the buyer will be than the fact it will sell for a dime on the dollar.”