Will Walmart’s VUDU Give iTunes A Run For Their Money In 2011?

iTunes dominated 2010 in terms of online movie consumer spending, but 2010 also marked an increase in competition for iTunes with Walmart's VUDU leading the pack.

When it comes to selling movies online, Apple’s iTunes media store has been the clear go-to destination for online shoppers. iTunes dominated 2010 in terms of online movie consumer spending, but 2010 also marked an increase in competition for iTunes with Walmart’s VUDU leading the pack.

Home Media Magazine reported the findings of an IHS Screen Digest report that showed that Apple was able to hold off challenges from competitors like Microsoft’s Zune Video (via Kinect), Sony PlayStation Store, Amazon VOD and Walmart’s VUDU. Despite the new competition, as the electronic sellthrough and video on demand market rose more than 60% in 2010, Apple iTunes still came out on top, perhaps due in part to the release of the iPad last spring and Apple TV last fall.

Research director of digital media for IHS, Arash Amel, said that, “The iTunes online store showed remarkable competitive resilience last year in the U.S. EST/VOD movie business, staving off a growing field of touch challengers while keeping pace with a dramatic expansion for the overall market.” However, it’s important to note that although iTunes staved off competition, the overall iTunes consumer spending fell almost 10% in 2010 to 64.5%. It was 74.4% in 2009.

Microsoft’s Zune Video was one of Apple’s biggest competitors last year, accounting for 17/9% of U.S. movie EST/iVOD consumer spending in 2010. But as for the future, it looks like Amazon VOD and Walmart’s VUDU are the one’s that Apple needs to be looking out for. Amel says, “The future of the online movie business may come down to a competitive battle between Apple and Walmart. Although Walmart is not on the charts yet, the company soon will become a major player if its current momentum continues. The company already represents a critical source of revenue for the major Hollywood studies because of its massive sales of Blu-ray Disc and DVD movies – and now is expanding this business into the online realm.”

For those of you who aren’t familiar with VUDU, it’s Walmart’s online media source where consumers can rent or buy movies and TV shows for their internet-ready HDTV, Blu-ray Disc players or PlayStation 3 consoles. Like iTunes, there are no monthly fees. Consumers can buy and rent movies when they want, and 2-night rentals are only $2. It will be interesting to see how VUDU will rise as a contender in 2011 and whether iTunes will suffer as a result of their success. What do you think the future holds for online movie sales and rentals? If you buy or rent movies and TV shows online, which service do you use?