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Retail giant Wal-Mart Stores Inc. (WMT - Analyst Report) has unveiled an in-store service to allow consumers to convert DVDs and Blu-ray discs into digital movies in order to boost up the value of movie ownership for its customers.

The service will start from April 16, and Wal-Mart will offer this service at 3,500 of its stores at only $2 for the conversion of standard DVDs and Blu-ray discs and $5 for any upgradation of standard DVDs to High-Definition (HD).

Accordingly, Wal-Mart will team up with five major Hollywood studios of Viacom Inc. ’s Paramount Home Media Distribution, Sony Corporation (SNE - Snapshot Report)’s Sony Pictures Home Entertainment, News Corp. (NWS - Snapshot Report)’s Twentieth Century Fox Home Entertainment, Comcast Corp. (CMCSA - Analyst Report)’s Universal Studios Home Entertainment and Time Warner Inc. (TWX - Analyst Report)’s Warner Bros.  The company will use its Vudu video-streaming service to convert the discs to digital service through the movie industry’s UltraViolet technology. The UltraViolet system, launched by Warner Bros., allows consumers to watch movies on multiple devices including televisions, tablets, smartphones, gaming consoles and more.

 Thus, people who own DVDs or Blu-ray discs from any of the five participating movie studios will be able to permanently access them on Wal-Mart's Vudu online streaming service which works on UltraViolet platform. However, The Walt Disney Co. does not operate on UltraViolet technology and, consequently, Wal-Mart’s offer will not be applicable for Disney or Pixar movies.

We believe this initiative will boost Wal-Mart’s lackluster movie sales which have been declining due to the presence of other forms of entertainment and online alternatives. With the digital access, customers will now be able to reconnect with movies anywhere on a variety of new devices.

Wal-Mart holds a Zacks #3 Rank implying a short-term Hold rating. Over the long-term, we provide a Neutral recommendation on the stock.

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