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Walmart video rental service takes on Netflix

Walmart video service Vudu now offers streaming movies to its website. Rental prices for Walmart video will range from 99 cents to $5.99.

By Dawn C. ChmielewskiLos Angeles Times/MCT / July 27, 2011

Shoppers at a Tampa Walmart pass a Red Box vending kiosk for DVDs in this 2008 file photo. Now, a Walmart video service is offering streaming movies, which customers can rent online.

ZUMA Press/Newscom/File

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LOS ANGELES – Wal-Mart Stores Inc. has added streaming movies to its website as the world's largest retailer attempts to grab a bigger share of the online movie market from rival service Netflix Inc.

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The decision to offer movie sales and rentals through Walmart.com comes just two weeks after Netflix raised prices for the majority of its customers. The price increase provoked howls of protest from consumers and led to disappointing subscriber growth projections in Netflix's earnings report released late Monday, causing a 5 percent drop in the company's stock Tuesday.

Wal-Mart, long the nation's leading seller of DVDs, signaled its intent to double-down on digital movie distribution in February 2010, when it spent a reported $100 million to acquire online video service Vudu, a Silicon Valley startup that was gradually being added to home entertainment devices.

Since the acquisition, Vudu has been able to leverage Wal-Mart's clout with manufacturers to incorporate its service into more than 300 consumer electronics products, including Internet-connected television sets, Blu-ray disc players and the Sony PlayStation 3 game console.

This spring, Vudu began offering movie rentals and purchases via the Web through Vudu.com, positioning the service to better compete with the likes of Amazon.com, Apple Inc.'s iTunes or Dish Network Corp.'s Blockbuster.

Offering Vudu's 20,000 movie titles for rental and purchase through Wal-Mart's website, which attracts about 40 million monthly visitors, is a further step in that direction. It better positions Wal-Mart to take on established online players, as well as traditional competitors such as Best Buy Co., which bought digital video service CinemaNow in May 2010.

Netflix also may be vulnerable as some customers threaten to downgrade or cancel their plans after the recently announced price hikes, potentially creating more demand for Wal-Mart and other online retailers. Based on a study of 500 Netflix users, research firm TDG predicted that 2 million to 2.5 million of the company's nearly 25 million users would cancel in the next six months.

On Wal-Mart's website, the movies will be available the same day that the DVDs go on sale in stores. Rental prices range from 99 cents to $5.99. Digital purchases are priced from $4.99 to $24.99.