Why Walmart Paid $US100 Million (!!) For Vudu

Vudu, despite being a swanky video service with delicious 1080p streaming, never made any money. So why did Walmart just drop $US100 million on a failing service? Peter Kafka reports it’s because Vudu convinced Walmart its video compression was nigh-wizardry.

The standard assumption was that Walmart wanted Vudu’s baked-in deals with Hollywood studios, so it’s interesting they were after the tech. There is some truth to Vudu’s claims, for sure: They were the first to roll out 1080p streaming at very nice bitrates compared to most services, and the video looked amazing for it. (But the compression wasn’t that damned magical, since action scenes with its HDX 1080p streams would still spike up to 20Mbps, and averaged around 9Mbps. Zune’s 1080p service requires an internet connection of at least 10-12Mbps, so it’s probably in the same ballpark.) Either way, their tech was good enough to interest Cisco as well, Kafka hears, which probably helped drive up the price.

Amazon, here comes Walmart. [MediaMemo]