As HD Televisions become more and more obtainable, analysts says fewer than 5% of the HDTVs sold in America last year can go online to pull movies and television shows. However, Wal-Mart has agreed to buy Silicon Valley start-up Vudu, whose 3 year old online movie service is currently being built into an ever growing number of television and blu-ray players.
Although no official information has come from the deal yet, a person who was briefed on the deal said the price offered was over $100 million, with a deal to predicted be made within a few weeks. Other companies such as Amazon, Best Buy, Comcast and EchoStar have also shown interest in buying Vudu.
Riddhi Patel, an analyst at the research firm iSuppli says ““It’s getting increasingly cheap to put Internet connections into televisions, and there are definitely financial opportunities to doing it.” iSuppli estimates that over 60% of HDTVs will connect to the internet by 2013.
According to analysts, this move would cost the cable and satellite companies a significant amount, with consumers having more reason to watch entertainment from sources other than cable or satellite, motivating a greater fraction of them canceling their monthly subscriptions.
Opposing the fall of cable and satellite subscriptions, Wal-Mart buying Vudu would raise sale of internet-ready televisions and disc players, which generally are rather pricy.
Vudu has yet to turn a profit. The company backed by Silicon Valley has found it difficult to persuade mainstream consumers to buy another appliance to add to their already over-stuffed with DVDs and blu-rays entertainment systems.