Earlier this month we covered Walmart's burgeoning partnership with the Ultraviolet DRM system backed by major Hollywood studios and their plans to "assist" customers in registering DVDs with the Ultraviolet system. Walmart has since announced additional details to the program and it's a clever attempt to drive more users to Vudu, Walmart's subsidiary movie streaming service.
Here's how the service works. "Starting April 16th, 2012 in more than 3,500 stores, Walmart customers will be able to bring their DVD and Blu-ray collections to Walmart and receive digital access to their favorite titles from the partnering studios. An equal conversion for standard DVDs and Blu-ray discs will be $2. Standard DVDs can be upgraded to High-Def (HD) for $5." There's even a handy video:
Anyone who doesn't have a Vudu account will have one created for them as part of this process. That's part of the genius to the plan, if customers embrace the offer, Walmart signs up hundreds of thousands, possibly millions of people for Vudu. The offer is only applicable to movies at this point in time, but that's still a huge potential market for the company's streaming service. Even better, from Walmart's perspective, is that first-time users who pony up $2 for a digital version of their DVDs are effectively paying to create Vudu accounts.
The $5 upgrade for an HD stream is particularly interesting. Vudu differentiates between HD and what it calls HDX; only the latter is 1080P. Viewers who opt for the $5 option are buying access to a lossy 720p stream as opposed to an upsampled 480P DVD. That's not to say Vudu's 720p stream is worse than an upsampled DVD, but we strongly suspect the difference between the two will be marginal. There doesn't appear to be an option to upgrade to what Vudu calls HDX (the company claims that their HDX technology offers such features as "psychovisual processing" and "color gradient processing" in addition to being 1080p).
The best part of this initiative (again, from Hollywood's perspective), is that it reinforces the idea that consumers should expect to pay for the right to access content they already own. A $2 fee is marginal -- these days, taking money out of an ATM that isn't affiliated with your bank will cost you twice that once both sides finish penalizing you. For Walmart and Hollywood, however, that $2 is nearly pure profit (the marginal cost of streaming one movie is tiny). Meanwhile, customers are getting a decent deal relative to Vudu's base prices. Vudu's average rental price is $2.99 (SD), $3.99 (HD) and $4.99 (HDX). Movies are available for purchase, typically for $14.99 (SD) and $19.99 (for both HD and HDX).
For consumers who want to move into the digital age but don't know how to handle the conversion themselves, this is actually a decent deal. We're a bit uneasy with the way Hollywood is re-monetizing the same content, but we'll likely see more of it as time goes by. The issue is further clouded when you consider that in some cases, updated technology really does vastly improve the source material. As someone who invested in the original Star Trek: TNG DVDs, I'm still downright excited by the re-releases that have been updated with remastered material and huge improvements to color and image quality. We're wary of handing Hollywood a blank check when it comes to selling us the same TV shows all over again -- but simultaneously willing to pony up when the improvements and additions truly make a difference.
There's no word yet on how this program ties into the Ultraviolet initiative, but the two are likely tied together on a deep level. Studios are pushing UV as the answer to the problems associated with streaming media, and programs like this are designed to make previously purchased material available online, even if we aren't confident they do so in the right way.