Wal-Mart buys Vudu, jumps into streaming movies. (Porn, too?)

Summary:Mega retailer Wal-Mart reportedly has purchased Vudu, a startup that streams Hollywood movies to television sets over the Internet

udpated below:

Wal-Mart, considered to be one of the biggest retailers of DVD movies, is getting into the streaming movie business with a reported acquisition of Vudu, a Silicon Valley-based startup that has been pushing the idea of  Web-based streaming movies into consumer living rooms.

The terms of the deal were not learned by the New York Times, which reported the news this morning. Neither Wal-Mart nor Vudu had confirmed the deal to the NYT but the news outlet cited interviews with at least two people familiar with the deal and said the two companies began informing Hollywood studios and TV makers today.

Assuming the report is accurate, the move could fast-forward the sales of Web-connected television sets that made a splash at the Consumer Electronics Show in Las Vegas last month. Of course, Wal-Mart is a big retailer of televisions, as well.

Vudu, a three-year-old company, has struggled as a start-up, largely because consumers were resistant to yet another box to connect to their TV sets. Last year, with a new CEO on -board, the company stopped making devices and instead started offering its movie store and interactive software as a feature for device makers, the NYT said.

As a side note, it will be interesting to see if Wal-Mart - known as a family-friendly retailer - will make any adjustments to the content lineup being offered by Vudu, notably adult movies. A year ago, I cited Vudu as an example of the crossover relationship between the mainstream consumer electronics industry and the adult industry - both of which host big conferences in Las Vegas on overlapping dates every January.

Vudu, which boasted having the greatest number of HD titles available, also has a discreet AVN (Adult Video Network) channel. The company says it has hundreds of titles from leading adult studios available and, for some titles, a high-def offering. It has also built-in discreet billing, password-protected privacy controls and competitive pricing to rent or own.

Regardless, as content slowly starts to morph away from physical DVDs and DVD players and more toward Internet streaming for video content, the move - on the surface - looks to be a good thing for both companies as well as Hollywood. Wal-Mart needed an online video strategy, Vudu needed something to advance its technology and Hollywood needed a way to keep stay-at-home viewers legally engaged with their productions.

update: Wal-Mart has issued a press release announcing the deal but provides no details of the terms, other than to say it's expected to close in the next few weeks.

Meanwhile, Peter Kafka at All Things D's Media Memo blog is reporting today that Wal-Mart is paying $100 million for Vudu, citing an unnamed source. Last month, Kafak wrote that Wal-Mart was eyeing Vudu and sad that Vudu had been marketing itself with a $50 million price tag.

In its release, Wal-Mart said Vudu will become a wholly-owned subsidiary of Walmart and that it wasn't disclosing financial terms because the acquisition is not material to its first quarter 2011 earnings.

About Vudu, the company said:

VUDU has licensing agreements with almost every major movie studio and dozens of independent and international distributors to offer approximately 16,000 movies, including the largest 1080p library of video on-demand movies available anywhere. Via their broadband Internet connection, users have the ability to rent or buy titles and begin viewing them instantly.

VUDU will continue developing entertainment and information delivery solutions such as VUDU Apps, a platform that delivers hundreds of streaming Internet applications and services to TVs and Blu-ray players with built-in Internet connectivity. VUDU has partnered with some of the leading names in Internet and media entertainment to offer applications on its platform including Facebook, Flickr, Twitter, The New York Times and The Associated Press.

Topics: Mobility, Hardware

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.