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Californiabased American animation studio DreamWorks Animation SKG Inc. (DWA - Analyst Report) has joined retail giant Wal-Mart Stores Inc. (WMT - Analyst Report) as its sixth major partner for its disc-to digital service, thereby providing digital access to DreamWorks movies.

Walmart teamed up with five major Hollywood studios, as announced in mid-March, to provide an in-store service to allow consumers to convert DVDs and Blu-ray discs into digital movies. The five studios were 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 uses 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.

Walmart offers 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.

People can now receive digital copies of their previously-purchased DVDs or Blu-ray discs from any of the six participating movie studios and permanently access them on Walmart's Vudu online streaming service which works on UltraViolet platform. However, The Walt Disney Co. does not operate on UltraViolet technology and thus Wal-Mart’s offer does not apply for Disney or Pixar movies.

We believe this initiative is expected to boost Walmart’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 are now able to reconnect with movies anywhere on a variety of new devices. In addition, Walmart will attract more movie fans with its wider collection after the addition of DreamWorks movies like Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon.

Walmart 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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