Wal-Mart Taking on Netflix; Retailers Adds Streaming Video to Web Site

CHICAGO (Reuters) - Wal-Mart Stores Inc is moving its Vudu video streaming and rental service to a place where it can get attract more eyeballs -- the Walmart.com web site -- as the growing service competes for attention with a variety of video services.

Adding Vudu to the main Wal-Mart site is the latest way the world's largest retailer is trying to be the go-to destination for shoppers, both in stores and, increasingly, online.

Vudu, which Wal-Mart bought last year, streams films and shows to computers, certain televisions, Blu-ray DVD players and Sony Corp's Playstation 3.

Wal-Mart declined to say how many people use its service, which does not offer monthly subscriptions like competitors such as Netflix Inc, although it did say Vudu continues to grow rapidly.

"Our user base has tripled since Christmas," said Edward Lichty, Vudu's general manager, who added that Walmart shoppers are a growing part of Vudu's business.

Before Tuesday, Vudu essentially operated on its own. Now, shoppers browsing Walmart's website can order a DVD sent to their home or to a store for pickup and can also rent or buy releases digitally and stream them directly from Walmart.com.

These days, video streaming is picking up steam as people use computers, cellphones and tablets such as Apple Inc's iPad to buy and watch movies and television shows.

Netflix added 1.8 million subscribers during the second quarter, but sees its U.S. subscriber base shrinking this quarter after it made pricing changes that sparked outrage.

Amazon.com Inc, the biggest Internet retailer, just licensed thousands of television shows from CBS Corp.

Adding Vudu to Walmart's site may chip away at DVD sales, once a big revenue generator for Walmart stores. Still, studios are supportive of the Vudu business as "they certainly see the future in digital," said Lichty.

"You can't get movies any earlier than you can get them on Vudu," Lichty said.

Vudu's movie rentals cost $1 to $5.99, or $3.99 to $6.99 for 3D titles. Buying movies costs $4.99 to $19.99 for regular titles and $11.99 to $21.99 for 3D movies.

"Our value proposition is to be the price leader in an industry and it's no different in this business," said Steve Nave, president of Walmart.com. "We will always make sure that we're the price leader so if a competitor does something we'll make sure that we're still leading."

Netflix now charges a $7.99 monthly fee for streaming.

Blockbuster Inc has launched an aggressive campaign to lure Netflix subscribers, offering them the chance to rent unlimited DVDs by mail and trade them in for new movies in stores.

Walmart would not say whether it would make a bid for Hulu, the online video site that Walt Disney Co, News Corp, Comcast Corp's NBC Universal and Providence Equity Partners have put up for sale. Netflix said on Monday it would not bid for the rival.

Eduardo Castro-Wright, Wal-Mart's vice chairman for eCommerce and sourcing, hinted at a Vudu service designed for the iPad in a recent presentation, but the company did not confirm any such plans.

(Reporting by Jessica Wohl; additional reporting by Lisa Richwine in Los Angeles, Liana B. Baker in New York and Alistair Barr in San Francisco; editing by Andre Grenon)