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What Vudu Users Will Lose Under Walmart


The retailer is known for its censorship. Don't expect anything different this time.

Walmart (WMT), already the largest seller of DVDs in the United States, is now taking on Amazon (AMZN), Netflix (NFLX), Blockbuster (BBI), and Apple's (AAPL) iTunes in the movie-download space.

Vudu, a service that allows customers to stream movies on demand and has licensing agreements with, in Walmart's words, "almost every major studio," will become a wholly-owned subsidiary of Walmart.

Financial terms weren't disclosed, as the acquisition is "not material" to Walmart's first-quarter earnings for fiscal year 2011.

The real question here is whether or not Vudu -- which has never been profitable -- will emerge as a true threat to its competitors under Walmart's ownership.

Perhaps not surprisingly, Edward Lichty, Vudu's executive vice president, thinks it will.

"We are excited about the opportunity to take our company's vision to the next level," he said in a statement. "Vudu's services and Apps platform will give Walmart a powerful new vehicle to offer customers the content they want in a way that expands the frontier of quality, value and convenience."

Eduardo Castro-Wright, Walmart's vice chairman, does too.

"The real winner here is the customer," according to Castro-Wright. "Combining Vudu's unique digital technology and service with Walmart's retail expertise and scale will provide customers with unprecedented access to home entertainment options as they migrate to a digital environment."

But, if history is any indication of things to come, customers won't have the "unprecedented access to home entertainment options" Walmart is promising.

For years, Walmart has refused to carry products that don't adhere to the company's family-friendly ways.

And, therein lies the rub with regard to Vudu.

Among the major digital streaming services, Vudu happens to be the only one to offer porn, which comes courtesy of a partnership with the AVN network and includes selections from Hustler Video, Wicked Pictures, Digital Sin, and Vivid.

AVN boasts such titles as It's Okay! She's My Step Daughter 2, Asstounding 3rd Degree, and Tiger's Got Wood, none of which one would expect to see for sale by Walmart.

A report in the New York Times quotes a "person briefed on the Walmart deal" who said Walmart plans to remove the adult category from Vudu "immediately."

There's no reason to doubt it. Take a look at Walmart's "Music Content Policy":

"Recordings identified with the Parental Advisory Label may contain strong language or depictions of violence, sex or substance abuse. Wal-Mart Stores, Sam's Club and (collectively 'Wal-Mart') do not carry recordings designated with the Parental Advisory Label."

However, the policy has also been applied to recordings Walmart simply didn't like.

The company refused to carry John Mellencamp's 1996 album, Mr. Happy Go Lucky unless images of Jesus and the Devil were airbrushed out of the cover art.

Click to enlarge

Walmart also refused to carry Sheryl Crow's 1996 self-titled album unless the following lyric in the song "Love Is a Good Thing" was changed or removed: "Watch out sister/Watch out brother/Watch our children as they kill each other/with a gun they bought at the Walmart discount stores."

Crow didn't make the revision, and Walmart didn't back down. Some estimate this ultimately cost her 10% of overall sales.

The movie Natural Born Killers by Oliver Stone was also banned by Walmart.

''Essentially, it's the sanitization of entertainment," Stone said at the time. "Studios like Warner Brothers (TWX) won't even release a film rated NC-17. They point to economic pressure from Blockbuster and Walmart, who won't carry those videos."

A final question:

Ever hear of a little film from 2005 called Wal-Mart: The High Cost of Low Price?

No? Here's the description from the back of the box:

Filmmaker Robert Greenwald takes aim at the corporate giant that's come to symbolize big business in America -- Wal-Mart -- blasting the box-store Goliath for allegedly paying substandard wages, skimping on employee benefits and gutting communities. This hard-hitting, emotional documentary profiles the struggle of everyday folks from around the country who've committed themselves to fighting the mega-retailer.

It's available on iTunes, Netflix, and Amazon.

The one place you can't get it?

Click to enlarge

No positions in stocks mentioned.
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