Congrats to Vudu, Lands on HDTVs

Dave Zatz —  July 31, 2009 — 3 Comments

lg-lh50-vudu

Despite sluggish hardware sales, two rounds of layoffs, and flirting with disaster, a shift in strategy along with a rumored cash infusion has landed Vudu some interesting licensing deals. While Entone (who?) and Vizio were the first to announce Vudu integration, it looks like LG HDTVs will be the first to stream Vudu video on demand.

Existing net-connected LG televisions and new models ($1700 and up) will both receive the Vudu service option next month. However, unlike Vudu’s standalone set-top boxes ($149 and up), these TVs probably don’t ship with massive amount of storage. Meaning, the Vudu distribution model has likely also shifted. Ryan Lawler of Contentinople is pleased with the results; Gizmodo is not.

Obviously, this space is crowding with multiple video streaming services offered on set-top boxes, gaming consoles, and now televisions. Which is great for us consumers – competition stimulates innovation and keeps prices competitive. However, at the end of the day, these guys are mainly battling the cable-cos’ massive household penetration/footprint and utilizing existing hardware (the cable box)… Far more economical and efficient than buying a new HDTV.

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3 responses to Congrats to Vudu, Lands on HDTVs

  1. So disappointed in pretty much every aspect of how they’ve executed these past few years. The technology is still amazing, though.

  2. This is the first smart move that Vudu has made. There are no profits in hardware sales, they are much better off sticking to software and content. I also like that you don’t have to buy Vudu now in order to get Vudu. There will be a lot of people who buy the TV and then discover that Vudu is a bonus. This makes the way that Vudu charges for content make more sense. Instead of goosing you on the hardware and then locking you into software, now they are going on devices people were going to buy anyway and it’s a bonus if a consumer wants to rent a film. Hopefully, we’ll see them strike more of these deals instead of trying to control the entire experience a la Apple.

  3. This is a classic case of the tail wagging the dog. Their Sales VP has no consumer experience – he comes from the OEM Sales world and has spent the past 3 years fighting with anyone in the company who knows what they’re talking about and burning cash.

    So rather than hiring someone who knows what they’re doing , they decided to change the business model to suit the VP. If they hadn’t blown over $50M of investors money, it would be kind of funny. The company will continue to fail until they replace the dead wood at the top.

    In addition the current revenue model is not sustainable. Hollywood is keeping 75%-85% of the revenue from each transaction, so basically Vudu makes about a dollar a transaction. Even with a skeleton staff, their current number of users and transactions doesn’t get them even close to 5% of the revenue needed to achieve profitability.

    And now that they’ve departed from the hardware solution, they are no longer of interest to anyone interested in playing in the home gateway/media console market – that was their only hope for an exit strategy.

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