Wal-Mart’s Vudu in Hollywood

Cable operators, you have been warned.

If anything underscores the long-term threat to cable companies' video service from the Internet, it is Wal-Mart Stores' purchase of Vudu -- a video-on-demand (VOD) Web service. Investors in Time Warner Cable and Comcast must hope they pay attention.

The danger isn't immediate. Vudu is one of several digital services, including Apple's iTunes and Amazon.com, which sell or rent movies via the Web. Watching programs from these services on a TV, while easier than it once was, remains fiddly. Vudu users need certain TV sets or Blu-Ray players with built-in Web access. Amazon requires compatible devices. Watching iTunes-acquired films on a TV requires an Apple TV box or an iPod connected to a TV. Last year, less than 5% of high-definition TVs sold had Web access, according to Macquarie.

In contrast, some two-thirds of homes with TVs are connected to either cable or phone company-delivered video, according to Nielsen. These offer regular TV channels as well as VOD. Operators like Comcast enhance VOD with free movies. No surprise then that cable VOD has gained more traction than Web services, despite its clunky interface.


Film Business, Hollywood

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