Wal-Mart to Expand Digital Service

Retail giant Wal-Mart Stores Inc. (WMT - Analyst Report) has announced its decision to expand its Disc-to-Digital service, an in-store service to allow consumers to access the digital versions of DVDs and Blu-ray discs containing their favorite movies. In addition, Walmart plans to launch a new application for the users of Facebook, Inc. (FB - Analyst Report) to provide easier access to exclusive movie titles and an opportunity to share and choose titles, thus influencing in-store and online purchase decisions.

The expansion of this disc-to-digital service will enhance the value of movie ownership and provide easier access through Internet-connected devices. The service will be available at Wal-Mart stores from this month onward. Consumers will be charged $2 for the conversion of standard DVDs and Blu-ray discs and $5 for upgrading standard DVDs to High-Definition (HD).

Further, Walmart is giving its customers 10 pre-selected movies free of cost when they open a VUDU account or register for an UltraViolet account or connect to an existing account.

The company started this service in April 2012. Walmart teamed up with six major Hollywood studios: DreamWorks Animation SKG Inc. (DWA - Snapshot Report), Viacom Inc. (VIA)’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, in order to provide this in-store digital service.

In addition, the company used 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.

Also, Walmart, in partnership with Hollywood's largest studios, developed the Walmart Entertainment Facebook App to provide more than 26 million Facebook fans with exclusive movie content for just $5.

This app will enable its users to rate movies, watch exclusive behind-the-scenes footage and even vote for popular movies. Moreover, it will enable access to exclusive content for theatrical and DVD releases and video games.

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 watch movies anywhere on a variety of new devices. Further, the social networking site Facebook will personalize the store experience. Wal-Mart holds a Zacks #3 Rank (Hold). Over the long-term, we provide a Neutral recommendation on the stock.