There's Vudu at Work Here....

Picture, if you will, a high definition content distribution service with a tiered pricing model and relatively low price point. Now, imagine this service utilized a remarkable streamlined Graphical User Interface (GUI), making it accessible to more than the traditional entertainment enthusiast market. And, to top it off, content distribution and storage is managed by an elegantly designed media box with a unique remote that is as easy on the eyes as it is on the hands.

Such a service exists. It's called Vudu.

Vudu has been out for a few years now, and while it's enjoyed decent market penetration, it's not perfect. I've never bought into the service because I am a Home Theater Purist. My HD Projector costs as much as a small car, and my Blu Ray Player could send your kid to private school for three months. I won't even get into audio, because i'll be talking all day. For those of us who require the best of the best, Blu Ray Discs are the highest quality sources through which media can be delivered.

So who, then, does Vudu cater to? The "good enough" crowd. This crowd consists of consumers who, although knowledgable about the performance cireteria of a middling home-theater experience, either do not know or do not care about the granularities of squeezing the best possible performance out of equipment.

I hereby dub this group "The Wal Mart Crowd."

Therefore, it came as no surprise when rumors began circulating that Wal Mart was in talks to purchase an online media distribution service, that Vudu was a contender. Well, folks. The deal is official; Wal Mart has purchased Vudu for $100 million. that's roughly 200% of the initial amount Vudu was looking for. What does this say?

Wal Mart knows a gem when it finds one.

Slowly but surely, Wal Mart is trying to make a name for itself in the electronics world. In the past few years, they have upgraded their selection of big-ticket electronics from no-names like Sylvania (Forgive me, but I don't want my HDTV manufacturer's primary product to be light bulbs) to mainstream brands like Samsung and Phillips. They will succeed...eventually

Here's why.

Although Wal Mart has adopted the higher end manufacturers and products, they still carry the cheap unknown brands on their shelves. What does that mean for consumers? That means that a teen leaving for college this fall can pick up a well priced--albeit underperforming--Blu Ray player for $89, and upgrade to a mid-range Blu Ray player by his sophomore year. Where will he go to purchase that mid-range player? Wal Mart. If Wal Mart continues to expand its offerings, then by the time he graduates college and lands a job, he'll be able to upgrade that mid-range player to a high-end player. Where will he go to purchase that new player? Wal Mart.

Wal Mart was in the process of creating an electronic eco-system before their acquisition of Vudu. If there is one thing Wal Mart does right, it is convincing consumers that everything they need is in one place.

Now, how do they expand beyond their current customer base? There are people out there (I was one of them until a few years ago) who refuse to go to Wal Mart because they associate the term "value" with the term "cheaply made." This is where Vudu steps in. Vudu is as advanced as HD content distribution can get--and Wal Mart owns it. What does this mean? Wal Mart has made its first foray into broadband content delivery--a field that many in the industry consider to be the "future of entertainment." This acquisition opens up doors for Wal-Mart that no other retailer can offer.

I can see the advertisement now: SALE ENDS SUNDAY. PURCHASE 8 TOWELS, AND GET A FREE VUDU HIGH DEFINITION MOVIE DOWNLOAD.

Sound ridiculous doesn't it? It doesn't matter. It will work.

They can tie Vudu content to purchases and no Big-Box retailer can offer. New parents can receive a buy 2, get one free Disney Movie download deal for every five boxes of pampers they purchase. And then guess where the dad is going to go when he wants to watch an action flick on the fly? Vudu. where is that mother going to go when she wants to watch the Sex and the City Movie with her friends the day before they go watch the sequel in theaters. Vudu.

The possibilities are quite vast.

This was a very smart acquisition on the part of Wal Mart. I look forward to seeing what exactly the mega-retailer does with its new "toy." If you are pessimistic, keep in mind that Wal Mart hasn't grown as popular as it has by mismanaging its properties. Stay Tuned...