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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.

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Walmart.com general manager Steve Nave said the retailer was following its customers as they increasingly embrace digital movie rentals and purchases.

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"We know customers are starting to shift their behavior, in terms of how they consume their media," Nave said. "We don't want to lose that customer as they shift to digital."

Wal-Mart has been a laggard in the digital space, significantly behind Apple's iTunes store and Microsoft Inc.'s Zune Marketplace and vying for third place with Sony's PlayStation Store and Amazon's Video on Demand. Wal-Mart's Vudu service accounts for less than 10 percent of all transactions — and even less revenue, because of its 99-cent promotions, according to researcher IHS Screen Digest.

"ITunes is the market leader in this field, accounting for approximately 65 percent of all movies and TV shows bought or rented over the Internet," said Arash Amel, IHS's digital media research director.

Amel doubts that incorporating the Vudu service on Wal-Mart's site will move the needle in terms of market share. Consumers have shown through the failures of other services that they don't want to watch movies on computers.

"The real strategic significance here," Amel said, is that this is the first step in Wal-Mart "trying to once more figure out how online video can add any meaningful value to the e-commerce components of its core business of physical goods."

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(Ben Fritz of the Los Angeles Times contributed to this report.)