Netflix beware, Walmart jumps into streaming movies

The largest retailer in the world gets its own streaming rental service, but can it compete?

Netflix just got a big new competitor at the worst possible time for the online movie rental service.  Just weeks after the company announced a new price hike that left customers tearing their hair and gnashing their teeth, Walmart—the largest retailer in the world—has just emerged with its own online movie rental service, Vudu, which is available on their website (come for the diapers, stay for a movie). 

Walmart acquired Vudu in February 2010 for an undisclosed amount, but until now, the service has been operating independently.  But now, with the integration with Walmart.com, Vudu will be available to a new swath of users with the official Walmart name behind it.  But can it compete with the likes of Netflix?

The pricing scheme is a little wonky, if you ask me (so I just saved you the trouble).  As far as new releases are concerned, you can rent a streaming movie for 24-48 hours for anywhere from $3.99 to $5.99.  See?  Wonky.  The prices reflect the streaming quality, so for $3.99, you can get standard definition for PCs, Macs, and non-HD TVs; for $4.99, you can get HD quality; and for $5.99, you can get HDX.  But the time frames…I’m not getting.  For example, you can rent “Limitless,” starring the tasty Bradley Cooper, for 48 hours, but “Source Code,” starring the tasty Jake Gyllenhaal, is only available for 24 hours.  But they both cost $3.99 to $5.99 to stream.

Vudu also offers some older movies for $2 for two nights, including “Up,” “Cloudy with a Chance of Meatballs,” and others.  And every Friday, Walmart/Vudu will be offering one streaming rental for 99 cents, but customers have to go to Walmart’s Facebook page to vote. 

The website could improve its search function, since searching for titles in the Walmart search bar takes you to all the DVDs, Blu-Rays, and games for that title, but not the Vudu rental offering.  For example, if you search for “Up,” which is available in the “$2 for two nights” section, the search results will turn up a range of different DVDs and games, but no rental.  Otherwise, you can go rent a DVD or streaming movie in a nearby Walmart store.  The service can also be streamed to several different devices, including certain TVs, Blu-Ray players, and game consoles.

While a company representative for Vudu would not disclose how many customers the service currently has, she did say that Vudu’s customer base has been growing dramatically—tripling since December.

But will Vudu be able to lure away disgruntled Netflix customers?  The pricing scheme alone won’t draw many, since it was the higher Netflix prices that pissed them off in the first place (Netflix offers unlimited streaming or unlimited DVD rentals for $7.99 a month, but together, they cost $16 a month).  Despite a strong second quarter performance, Netflix's stock fell 10% in after-hours trading following the company's earnings call, which seems to be due to the company's new pricing system.

Amazon offers unlimited streaming movie rentals, but their selection sucks.  Otherwise, you can rent specific movies for 48 hours for $3.99. 

The real draw of Vudu is its HD and HDX offerings, for those who are serious about their movies and willing to pay a little more for top quality.