Retail giant Wal-Mart will announce its support for Hollywood's UltraViolet digital movie technology at a media event to be held in Los Angeles next Tuesday, according to several people familiar with the matter but not authorized to speak publicly.
As the nation's biggest seller of DVDs — responsible for up to 40% of all DVD sales in the U.S. — Wal-Mart's support could provide a critical boost to UltraViolet, which had a troubled launch last fall. The technology, which is backed by five of Hollywood's six major studios and dozens of electronics manufacturers, lets consumers store copies of movies they buy in the online cloud, which they can then access on any compatible digital device.
Wal-Mart will sell Ultraviolet-enabled copies of movies through Vudu, the online video service that it acquired in 2010. In addition, consumers will be able to bring copies of DVDs they own into stores. For a small but not yet determined fee, Wal-Mart employees will give those customers a copy of the movie in their UltraViolet account.
That option, which Warner Bros. Home Entertainment Group President Kevin Tsujihara called "disc-to-digital" at an investor event last week, will be critical to boosting use of UltraViolet. Thus far, the only compatible movies have been certain ones that have been launched on DVD since October.
Technological glitches and a cumbersome registration process generated negative consumer reactions when Ultraviolet debuted. Tsujihara said last week, "The launch wasn't perfect, I'll be the first one to admit it," adding that it was important to get the years-in-the-works technology rolled out sooner, rather than waiting to perfect it.
Tsujihara and other Hollywood executives have said it is critical for Ultraviolet to succeed in order to turn around ongoing declines in home entertainment revenue. While online movie rentals are increasingly popular, online movie sales are not. Studios make a much larger profit from sales than rentals.
Once Wal-Mart begins supporting UltraViolet aggressively, it's likely that other retailers such as Best Buy will follow. Amazon.com, the largest online DVD retailer, in January announced a deal giving it the rights to sell Ultraviolet digital copies, but it has yet to start offering the service.
All of Hollywood's top movie studios save for Walt Disney Studios are behind UltraViolet, but the dominant seller of digital movies, Apple's iTunes, is not involved. The iPhone and iPad maker is developing its own service to store movies in the virtual cloud, people familiar with the matter but not authorized to speak publicly have said.
News of Wal-Mart's plans to convert DVDs into Ultraviolet copies was first reported by the Wall Street Journal.
Hollywood stumbles on next big step in home video
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— Ben Fritz and Dawn C. Chmielewski
Photo: Carts at a Wal-Mart store. Credit: David Paul Morris / Bloomberg.