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Walmart’s Digital Move Service VUDU Gets a New Leader but Can He Make It a Success?

by Michael Goodman | 7月 22, 2014

Retail giant Walmart recently announced it had hired Jeremy Verba to serve as vice president and general manager of VUDU, Walmart’s on-demand video service which it acquired in March 2010 for a reported $100 million.

Verba has an impressive resume having served as president and founder of E! Online, as a general manager at Zynga and at AOL, and as CEO of dating web site eHarmony. Verba has his work cut out for him trying to make VUDU a success as electronic sell-thru (EST) is proving far less popular that physical sell-thru did. According to Strategy Analytics’ Q4 2013 ConsumerMetrix Survey, only 4% of U.S. Internet users that watched TV shows and/or movies delivered via the internet in the last month watched on VUDU. In comparison, 47% watched on Netflix and 28% watched on Hulu. This has has long-term implications for Walmart as digital distribution is transforming the video business, a key part of Walmart’s business.

Entertainment (which Walmart defines as electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan contracts and prepaid service, movies, music, video games and books) is one of Walmart’s six strategic merchandise units in the US. This segment, however, is in decline, falling from 12% of revenues (approximately $31.7 billion) in FY 2012 to 11% of revenues (approximately $30.7 billion) in FY 2014.

At least some of this decline is attributable to the transformation the video industry is under-going. Physical sell-thru in the U.S. has lost nearly 50% of its value over the past decade and electronic sell-thru is proving insufficient to offset this decline. Strategy Analytics estimates that electronic sell-thru accounted for $1.1 billion in revenue in 2013. A far cry from what the category has lost over the past decade. In comparison, subscription VOD, a service VUDU does not offer, is proving to be consumer’s top choice, accounting for 69% of online video transactional revenue in 2013.

With Comcast’s proposed acquisition of Time Warner Cable, AT&T’s acquisition of DIRECTV and FOX attempting to acquire Warner Bros. Entertainment the video industry is in a period of change. Now might be an opportune time for Mr. Verba to think about expanding the VUDU brand to subscription VOD. Hulu’s owners have considered selling in the past, now might be the time to give them a call. Who know what might happen?

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