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Wal-Mart Stores (NYSE: WMT ) has tried to knock down video rental guru Netflix (Nasdaq: NFLX ) more than once -- and skulked back home to Arkansas with egg on its face every time. And it's time for another round.
According to The New York Times, Wal-Mart is buying digital movie streaming service Vudu for an undisclosed amount, putting a long-running rumor to rest in the affirmative. Vudu's claim to fame is an extensive library of high-definition Hollywood movies.
Its total catalog of mainstream films stands at about 7,800 titles. That is certainly enough to be respectable next to Netflix, which used to boast of 12,000 titles or more but doesn't like to pull out those numbers anymore. Vudu's streaming library absolutely beats the 2,700 MovieLink-powered titles available from Blockbuster (NYSE: BBI ) On Demand. Then again, more titles does not automatically lead to a better movie-watching experience, nor does it guarantee more customers. Otherwise, Netflix would already have lost to Amazon.com (Nasdaq: AMZN ) , where you can find more than 20,000 titles in the Amazon Video On Demand rental library.
Vudu's ace in the hole looks like it's dead on arrival: Vudu is the only one of the major digital movie outlets to serve up adult content. Uncle Walton doesn't like porn or even colorful language, and may deep-six Vudu's adult offerings right away.
So what we have here is a major retailer gearing up for online video battle by buying a bit-player in the game. Buying MovieLink didn't set Blockbuster on fire. Amazon is a fine retailer and an online giant, but Netflix isn't running scared. Even Apple (Nasdaq: AAPL ) , which sells set-top boxes for watching its digital videos and generally dominates the digital music space, isn't much of a threat in digital video today.
The last time Wal-Mart entered the ring with Netflix, the young upstart walked away with Wal-Mart's customers in its pocket. Netflix is older and wiser today, and arguably doing what CEO and founder Reed Hastings meant to do all along. Those red mailer envelopes were just a stopgap distraction until technology and consumer habits caught up with Hastings' vision.
I think Wal-Mart is setting itself up for another fall here. Do you think the megaretailer stands a chance this time? Let us know why (or why not) in the comments section below.