UPDATE, Febuary 22, 2010: The New York Times reports that Walmart has "agreed" to buy Vudu.

Walmart has taken on any number of retail rivals and won. Now, it’s rumored that Walmart will be going after Netflix by purchasing Vudu, a struggling Netflix competitor that lets TV viewers to download a film for a limited time or pay more to purchase it. This wouldn’t be Walmart's first attempt to knock out Netflix: The mega-retailer scuttled a failed DVD-by-mail service in 2005; and, in 2007, attempted to launch a movie download service similar to Apple's iTunes (and Vudu). Is the third time a charm for Walmart's Hollywood ambitions? (Watch Walmart's "creepy" clown commercial)

Buying Vudu is a good move: We've been waiting for Vudu to either "close its doors forever" or "get snapped up by a bigger fish," says Ben Patterson in Yahoo. That Walmart has gobbled it "makes complete sense." After "the big box business"'s embarrassing failures in this niche, Wallmart can "jump right back into the game" now and — most important — do so "for a bargain" price.
"Report: Walmart looking to buy Vudu?"

Saving Vudu won't be easy: Walmart has its work cut out for it, says Jennifer Van Grove in Mashable. After negotiating Vudu's current contracts with "LG, Sanyo, Toshiba and Sharp," who make TVs that can download Vudu movies directly, Wallmart has to "mitigate deals with the same movie studios that are putting Netflix new release rentals on pause." Deliver on both these points, and Walmart could bring "Vudu’s arguably superior HD-streaming experience to a much larger audience."
"Does Walmart want to be the next Netflix ... again?"

Walmart must change the way people rent movies to make this work: So far, renting "a movie over the internet" can't compete with DVD rentals or watching movies through "cable providers," says David Frommer in Business Insider. To succeed, Walmart must "figure out a killer pricing model and achieve a level of ubiquity that other paid, on-demand Web video services have not." Do this, and "it might have a shot."
Walmart wants to go after Apple again"

Walmart's 'creepy' clown commercial
Wal-mart's discount coffin controversy
Wal-mart's health care heresy