Short version: A few prominent players have accepted Apple’s terms and will be giving Steve Jobs a big chunk of their subscription revenue.

Many more are sticking around the App Store, but removing any kind of e-commerce link from their apps. This makes their apps less useful, but at least it doesn’t cost them any money.

And a third group is trying an end run by building their own Web apps that will work on Apple devices without requiring the company’s approval.

Some examples from each category:

Play along, eat the tax: Some big print publishers, including the New York Times, Condé Nast and Hearst, are working with the new rules.

That means that they’ll hand over 30 percent of the subscription revenue they generate via iOS apps every month, and that they won’t have access to as much consumer data as they’d get if they sold the subscriptions on their own. But they’ll put up with it in order to reach the 225 million iTunes accounts Apple controls.

(Variation on the theme — play along, pass the tax along to consumers: Music subscription service Rdio is accepting Apple’s tax as well. But to protect its margins it is raising the price for subscriptions sold through iOS devices, from $10 to $15. After Apple gets its 30 percent cut, Rdio will end up with the same $10 it would have had before the new rules.)

Stay in iTunes, but grudgingly: This is the “better than nothing” approach. Services like Netflix, Hulu, Rhapsody, Spotify, and publishers like Time Inc. and The Wall Street Journal (which, like this Web site, is owned by News Corp) are keeping their apps in iTunes. But rather than hand over cash and lose access to customer data, they won’t sell any subscriptions through their iTunes apps.

And at Apple’s insistence, they are stripping out any links that send customers to the companies’ home Web sites. This even applies to services that aren’t selling subscriptions at all, but are offering access to content as part of other subscription services. See, for example, ESPN’s WatchESPN app, which tells users that they have to visit an ESPN Web site to sign up for the service, which is free for certain cable company customers. But the app doesn’t offer a live link to the site, just an address.

End run: The Financial Times was the first big media company to build a Web site that mimics an app but works on Apple’s Safari browser, as a way of working around Apple’s restrictions while reaching Apple’s customers. Now Amazon has followed suit, as has Wal-Mart’s Vudu video service.

Note that both the FT and Amazon continue to keep their old apps in iTunes; they’ve just neutered them. You can still read Kindle titles you bought on Amazon’s iOS app, for instance — you just can’t press a button that will take you directly to Amazon’s Web site to buy a new one.

So what does all of that tell us about the App Store ecosystem and how developers will fare in and out of it?

Not much. It’s pretty early. We might have a better idea in a few months when some publicly traded companies like the Times may end up talking about their Apple relationship during earnings calls. (Admittedly, that’s a stretch of a hope: Apple has a way of getting most of its partners to STFU.)

That said, here’s a not-very-out-on-a-limb prediction: Companies who already have lots of customers and are already in frequent communication with them, like Amazon, should do fine outside of the store.

And companies that have lots of potential customers but little traction, like Vudu, will likely struggle. Particularly since that company sells the same thing — video-on-demand rentals and sales — that Apple already sells through iTunes.

Yesterday, from the back of the official All Things Digital minivan, BoomTown donned the official ATD Ray-Ban Aviators to talk on WSJ.com’s “Digits” online news show about the $300 million acquisition of Kosmix by Wal-Mart announced earlier this week.

The deal for the Silicon Valley site, which has built a social media platform that organizes content by topic, will be interesting to watch, since the retail giant has tried a number of digital moves in years past that seem to have had negligible impact.

Such as its Vudu movie service, which Wal-Mart bought last year for $100 million, as MediaMemo’s Peter Kafka also noted on the program.

(By the way, it goes without saying, I do not pontificate and drive–at least not on a Skype video connection.)

Here’s the video:

The retailers say the ventures not only help them gain a foothold in the fast-growing digital entertainment business, but also give them an edge in selling Internet-connected televisions and movie players in their stores.

Many of the TVs that Best Buy sells now come with CinemaNow software, while many of Wal-Mart’s are loaded with Vudu. The retailers also use free or discounted digital entertainment to lure customers to their websites, much as they have long done by selling certain movie and music discs at a loss to attract shoppers to their stores.

Read the rest of this post on the original site

The Wal-Mart Stores Inc. (WMT) membership warehouse chain’s more than 500 clubs will be outfitted with Wi-Fi by November. The move is testament to Sam’s Club’s high hopes for Internet TV sets and other Web-enabled devices this holiday shopping season.

By providing Wi-Fi, Sam’s Club says it hopes to help customers better understand such products, which are still relatively new to the market. “This will allow a member to walk up to a Samsung LCD Internet-enabled TV and see how to find his Facebook page or stream video from Vudu,” said Sam’s Club Chief Executive Brian Cornell in an interview. “It is an intimidating category with lots of complexity.”

But Wi-Fi also will allow Sam’s Club shoppers more reliable Internet access on their smartphones in the warehouse, where they can find additional information about what they are buying or check competitors’ prices.

Read the rest of this post on the original site

Forrester (FORR) analyst James McQuivey asserts in a blog post today that Google TV has a chance to succeed at redefining the consumer television experience in a way in which Apple (AAPL) TV, Roku, Vudu, Boxee and various other combatants have not been able to do.

“I have been amazed at how little people understand what’s really going on here,” he writes. “Google TV is a bigger deal than you think.” McQuivey asserts that TV matters “in a way that nothing else does,” driving $70 billion a year in advertising and a comparable amount in cable and satellite TV fees, plus another $25 billion in consumer electronics sales. He also points out that viewers watch TV on average 4.5 hours a day.

Google’s (GOOG) goal: to get a chunk of the giant pot of TV ad money.

Read the rest of this post on the original site

Kara was full-tilt geek this week with an early post from TED’s viral video division. It seems Bill Gates told the assembled geekerati his one true wish. Wanna know what it is? We guess you’ll have to watch the video to find out. Kara then gave us some perspective on Yahoo (YHOO) playing social catch-up with its recent Twitter deal. Everyone may be muttering “too little, too late,” but it could be worse. The Internet giant could have tried to release its own social network. Kara then jetted off to sunny Mexico to give a keynote at SISCTI, Mexico’s major infotech conference. We’re hoping she brings us back a sombrero.

Everyone is chattering about Web-delivered video this week, but Peter brought some real perspective to all the racket. It looks like Walmart (WMT) is coughing up $100 million for Vudu in its theoretical bid to compete with the iTunes store. That’s a way bigger ticket than had been expected, but it looks like the world’s largest retailer is getting some serious skin in the game. Midweek, Peter brought us a story of triumph from the world of newspapers. It seems that the financial situation at the Washington Post (WPO) was “less bad” last quarter. The bleeding has slowed, but the patient is still in the ICU. Peter rounded things out with a dose of reality for Apple’s (AAPL) otherwise magical rhetoric. Billions of songs, billions of apps and download volume that leaps every quarter do not equal impressive profits, apparently. Don’t feel too bad for Steve though. We all know songs and apps are just fuel for the iFire.

Digital Daily started off the week all aflutter with news that Twitter is pumping out 600 tweets per second. That means if all those tweets are paced end to end, multiplied by 60 seconds in a minute, 60 minutes in an hour and 24 hours in a day, Twitter still isn’t making any money. After a slew of posts early in the week, John tied up Palm coverage with some thoughts on “Project Jumpstart.” It seems Palm (PALM) should be thinking about a different sort of project, maybe one that involves getting bought. Finally, in everyone’s favorite category, John covered some more Apple speculation in the iPad afterglow. It looks like analysts are expecting a refreshed iPhone that will cost less and potentially have some new gesture-based features.

Walt’s column was of particular interest this week, especially if you’ve got finances to deal with or a certain gray-bearded uncle to pay in mid-April. Walt gave the rundown on the latest Mac version of Quicken. The Mac-Quicken relationship has always been tricky, and people (Weekend Updaters included) have used some tricky workarounds to keep using the Windows version of Intuit’s (INTU) popular finance program. Sadly, the latest version for Mac doesn’t really close the gap, and Walt wasn’t too up on making the switch. Mossberg’s Mailbox was full of magicJack mail this week–sort of like the leftovers from last week’s wild VOIParty. It turns out that it’s not the best idea to try to fax over the magicJack, even if it does sort of work for some people some of the time. That settles it. Weekend Update is gonna get one and hook it up to our Clapper-activated file-server.

Finally, Katie brought the cloud down to ground level this week with a review of Pogoplug, a device that lets you host and stream your files from a home hard drive over the Internet to your devices. You can be your own cloud, sort of, and Katie said she liked it just fine. Low-level clouds…maybe we can get the term fog computing to catch on.

Stay safe, be well, and have a look at the some of the stuff coming out of Chile this weekend. This time it was Santiago, but AllThingsD HQ sits on the ring of fire too.

Walmart (WMT) will be paying more than $100 million for the service, people familiar with the deal tell me. That’s much more than the $50 million I had previously heard Vudu was seeking and much more than industry observers thought it would get.

At this point I need to advise skepticism about reported sales prices, since they’re often inflated or include theoretical but seldom achieved “earnout” clauses. But my source tells me this will be a cash deal when it officially closes, which it hasn’t. No money has changed hands yet.

Vudu is an also-ran in the online movie business, which isn’t that much of a business to begin with. So why would the world’s biggest retailer pay a premium to get in?

Because Vudu’s management has convinced Walmart that its video-compression technology is something special, people familiar with the transaction tell me. Apparently, others think so, too: Vudu was able to attract multiple bidders. I’ve heard, but haven’t been able to confirm, that one of them was Cisco (CSCO).

Vudu has licensing deals with all the big movie studios as well, but that’s of secondary importance to Walmart, which has way more leverage with Hollywood than Apple, Netflix or Amazon (AMZN): The studios need Walmart’s physical reach much more than Walmart needs to get into the digital movie business.

Still, doesn’t hurt to make nice. Walmart and Vudu have been briefing the Hollywood studios today in advance of an official announcement, which could come later today.

Here’s some more background on the piece, from my January story:

After trying for two years to compete with Netflix’s DVD-by-mail business, Walmart gave up in 2005 and agreed to send its customers directly to Netflix (NFLX). In 2007, with the backing of all the big studios and tech help from Hewlett-Packard (HPQ), the retailer tried to launch a download service, a la Apple’s (AAPL) iTunes. But it abandoned that effort in less than a year.

Meanwhile, sources say Vudu has been seeking a buyer–in the form of either a big-box retailer or an electronics manufacturer–for some time without success. Internet executive Mark Jung ran the company for a year but left in November 2008; founder Alain Rossmann became interim CEO when Jung left and has kept the title since then.

Santa Clara, Calif.-based Vudu has raised at least $21 million from Benchmark Capital and Greylock Partners.

UPDATE: Walmart has officially announced the deal, noting that it is expected to close within a few weeks. No word on price except that it won’t be material.

Walmart Announces Acquisition of Digital Entertainment Provider, VUDU
Company takes next step to enhance home entertainment and information delivery options for consumers

BENTONVILLE, Ark., Feb. 22, 2010 — Walmart announced today a definitive agreement to acquire VUDU, Inc., a leading provider of digital technologies and services that enable the delivery of entertainment content directly to broadband high-definition TVs and Blu-ray players. The deal is expected to close within the next few weeks.

VUDU is a revolutionary service, built into a growing number of broadband-ready TVs and Blu-ray players, that delivers instant access to thousands of movies and TV shows directly through the television. Customers with broadband Internet access and an Internet-ready TV or Blu-ray player can rent or purchase movies, typically in high-definition, without needing a connected computer or cable/satellite service. New movies and features will be added continually, enabling customers to enjoy a product that continues to become more robust long after they have left the store.

“The real winner here is the customer,” said Eduardo Castro-Wright, vice chairman for Walmart. “Combining VUDU’s unique digital technology and service with Walmart’s retail expertise and scale will provide customers with unprecedented access to home entertainment options as they migrate to a digital environment.”

VUDU has licensing agreements with almost every major movie studio and dozens of independent and international distributors to offer approximately 16,000 movies, including the largest 1080p library of video on-demand movies available anywhere. Via their broadband Internet connection, users have the ability to rent or buy titles and begin viewing them instantly.

VUDU will continue developing entertainment and information delivery solutions such as VUDU Apps, a platform that delivers hundreds of streaming Internet applications and services to TVs and Blu-ray players with built-in Internet connectivity. VUDU has partnered with some of the leading names in Internet and media entertainment to offer applications on its platform including Facebook, Flickr, Twitter, The New York Times and The Associated Press.

“We are excited about the opportunity to take our company’s vision to the next level,” said Edward Lichty, VUDU executive vice president. “VUDU’s services and Apps platform will give Walmart a powerful new vehicle to offer customers the content they want in a way that expands the frontier of quality, value and convenience.”

VUDU, based in Santa Clara, Calif., will become a wholly-owned subsidiary of Walmart. The company is not disclosing financial terms of the agreement as the acquisition is not material to its first quarter earnings for fiscal year 2011.

But Google also got a second promotion during last night’s game, though I’m guessing it didn’t pay for this one. An ad promoting Internet-connected TVs from Vizio featured a battery of viral video stars made famous via Google’s YouTube–without ever mentioning Google (GOOG) or YouTube by name.

The spot does give formal, if very fast, shoutouts to Web services like Facebook, Pandora, Twitter, Vudu, Yahoo (YHOO) and Yahoo’s Flickr. Oh. And Beyoncé.

Swing and a miss, in my humble amateur advertising critic’s opinion.

For one thing, anyone who’s going to recognize the likes of Tay Zonday and the Numma Numma guy knows that the whole “cramming all of YouTube’s stars into one bit” bit has been done by lots of people before, most notably South Park. Everyone else will just wonder who the fat kid and the skinny dude are.

The other problem with this ad is one common to many efforts to sell Internet-connected TVs: It doesn’t explain the most compelling use for these things.

Because you may not want to watch YouTube on your big screen (or to use Twitter or call up Pandora, etc.). But you may very well want to watch streaming movies and TV shows from services like Netflix (NFLX) and Vudu.

You’d have to squint very hard to see that the Vizio spot was showing a clip from “The Hangover,” though. And chances are that almost no one who saw the ad has heard of Vudu (hence its sale talks).

So there’d be no way for anyone to know that Internet-connected TVs make this stuff really easy. Too bad. If you see this stuff demoed in person, it’s really compelling–it gets close to the “500 channels” pitch we used to hear about in the early 90s, in the best possible way.

At some point in the next few years, there will be no need to pitch this, because the majority of new TVs sold will be Internet-connected. In the same way HD is now more or less standard on new sets.

But for now, this stuff is still a novelty. A good way to change this might be with an effective ad.

BoomTown just could not wait for Carol Bartz’s one-year anniversary at Yahoo (YHOO) to roll around so that the judging could commence. Kara and Carol have a famously sordid history, possibly involving both K-Fed and Brangelina. Even with all that history, Kara was pretty complimentary, giving Bartz an A- in the management category and a C+ for financials. It looks like we’ll be able to tune in for the next few days and catch this ongoing judgefest. Kara moved on from the report card to a quick post declaring her love of network TV drama, and not the “Law and Order” kind. The fight over at NBC for late-night supremacy has been more hilarious than Leno or Conan. Maybe the solution is just to put some network execs on screen in that slot. Kara finished out the week with a conversation with recently departed RealNetworks (RNKW) CEO Rob Glaser. No, he isn’t dead, but he has decided to step down to look into other opportunities. Near as we can tell, they may have something to do with woolly mammoths.

Digital Daily was abuzz this week with the headline story of Google Labs adding yet another feature to Gmail. The new foreign policy tab enables Google (GOOG) to make better publicized international relations decisions than the Federal Government (and do so 20 percent faster if you’re running Chrome). Of course, it wasn’t all Google rattling China’s cage this week. John covered the party over at Intel (INTC) after the chip maker announced a blowout Q4. Finally, readers got a taste of capitalism at its best. Now you can get either America’s best network or America’s best smartphone (not both, of course) at a significant price cut. Thanks to pressure from Verizon (VZ), AT&T (T) dropped rates on certain calling plans.

Peter hit us with lots of video news this week, starting early with the potential partnership between Vudu and Wal-Mart (WMT). The world’s largest retailer seems to be thinking about getting into the Web TV business, or as it calls it, opening a supercenter in your house. Some might be watching for a rerun of the megaretailer’s failed shot at competing with Apple’s (AAPL) iTunes for music sales, but the Web TV space is wide open, so far. Also on the home entertainment front, Peter reported that it looks like Netflix (NFLX) may get a one-up from Nintendo fairly shortly if it can finalize a deal to add the Japanese game giant’s systems to the list of places you can stream its digital video content. Peter rounded things out with a little foreshadowing that YouTube, the Web video 800-pound gorilla, may be edging its way out of the red. Since acquisition, YouTube has never turned a profit, and Google execs have been muttering that they expect that to change shortly. What’s different this week? An industry analyst finally agrees.

If a moment of Mossberg just isn’t enough for you, then you are in luck this week as team Walt and Katie went all the way with three new installments of gadget wisdom. In Personal Technology, Walt reviewed the Sony Reader Daily Edition. While the big improvement to Sony’s (SNE) previous e-reader offering is the addition of wireless connectivity for remote download of articles and books (think Amazon Kindle’s “Whispernet”), Sony also upped the ante in form factor and interface. Overall, Walt was positive and felt the device was a strong offering. Mossberg’s Mailbox was overflowing this week with all kinds of questions from the Nexus One crowd. Walt picked three gems and clarified some points on measly app storage capacity, cell company coverage maps and the nitty-gritty on synching data between the phones and computers. Katie donned her gaiters and bravely waded into the weeds of search technology to shed some light on a major emerging trend—visual search. Both Google and Microsoft’s (MSFT) Bing are offering ways to search for things you can’t recall the name of, doing so by comparing images until you get that aha! moment. This stuff is complicated, but head on over to Katie’s article to figure out how it is going to change the search landscape.

Thanks for reading this week. Weekend Update wishes everyone as much good luck as we had making it out of CES Las Vegas alive.

Oh yeah, and a quick note to Siegfried: We may have one of your tigers, and also Roy.

Maybe. Sources tell me Web video start-up Vudu is in “meaningful” acquisition discussions, and industry executives believe Walmart is the likely buyer.

Vudu executives declined to comment. I’ve lobbed a call into the Walmart (WMT) press center but haven’t heard back.

It’s a deal that makes some sense on paper: Vudu is one of many services that give consumers a chance to rent or buy movies over the Web, but it hasn’t gotten much traction. “It’s a beautiful product and a really great service, in need of distribution,” says a person familiar with the company.

And Walmart has tried video delivery twice before but backed away each time. Acquiring a tech team at the right price could help it make a third effort.

After trying for two years to compete with Netflix’s DVD-by-mail business, Walmart gave up in 2005 and agreed to send its customers directly to Netflix (NFLX). In 2007, with the backing of all the big studios and tech help from Hewlett-Packard (HPQ), the retailer tried to launch a download service, a la Apple’s (AAPL) iTunes. But it abandoned that effort in less than a year.

Meanwhile, sources say Vudu has been seeking a buyer–in the form of either a big-box retailer or an electronics manufacturer–for some time without success. Internet executive Mark Jung ran the company for a year but left in November 2008; founder Alain Rossmann became interim CEO when Jung left and has kept the title since then.

Santa Clara, Calif.-based Vudu has raised at least $21 million from Benchmark Capital and Greylock Partners. I’m told that when the company was marketing itself last fall, it was looking for a sale price of $50 million or more. But it may not have much leverage to command a premium.

Vudu started out by marketing an Internet-connected box that consumers plugged into their TVs, but that offering seemed to underwhelm customers (as well as All Things D‘s Katie Boehret). It is now focused on building that technology directly into TVs and Blu-ray players and marketing itself as a Netflix-like service.

The company’s supposed strengths are a video compression technology that makes it feasible to stream movies in high definition and a peer-to-peer architecture that cuts down the cost of delivering large files. UPDATE: Vudu reps tell me they no longer use P2P for file delivery.

Confused? Of course. So was I, when I checked out Hulu’s new “Desktop” app, launched today as part of the video service’s new “Labs” collection of experimental offerings.

Basically, it’s downloadable software that makes it easier than ever to watch Hulu’s shows and clips in the same way that you’d watch TV–on your sofa, remote in hand. But Hulu wants to make sure you don’t actually think it replaces TV.

Note how the company describes it: “A lean-back viewing experience for your personal computer” that will work on Macs and PCs with “standard Windows Media Center or Apple remote controls”–but not with Microsoft’s (MSFT) Windows Media Center machines or Apple’s (AAPL) AppleTV boxes. And it also isn’t designed to work with any other Web-to-TV software or boxes, like Vudu.

To spell this out: I’m writing this post from the “cave” that the All Things Digital team has set up for the D7 conference, and it’s full of gorgeous 22-inch and 30-inch Mac displays that are much nicer than anything that sits in my cramped Brooklyn apartment. Hulu is saying that they’d be A-OK with me watching Tina Fey and crew, via their service, on those monitors. But they don’t want me trying to get that show on an actual television.

Isn’t a screen a screen? Nope. Not to Hulu’s owners: GE’s (GE) NBC, News Corp.’s (NWS) Fox, and soon, Disney’s ABC (ABC). To them, it’s important to make the distinction between TV programming, which generates significant ad revenue and/or cable subscription fees, and online video, which generates very little at all. That’s why NBC CEO Jeff Zucker reiterated his opposition to Boxee, the software that makes it easy to move Web video like Hulu to TV sets.

Now all he has to do is convince tech-savvy entertainment consumers to play along. Good luck!

UPDATE: Several readers have suggested to me that Hulu and its owners aren’t as dumb as they seem, and that they do indeed intend to use Desktop eventually, as a Boxee-like product of their own–that is, they will use it to let people watch Hulu on TV. If so, that means that Jeff Zucker wasn’t being honest when he declared that “right now we’re committed to Hulu being an online experience, and that’s where our vision is today, and I think that will continue.”

But for what it’s worth, whenever I’ve talked to anyone at ABC, Fox, NBC or Hulu, all of them have been consistently mindful about not trying to disrupt the existing value chain that supports the cable and broadcast TV business–“the ecosystem” is the euphemism they prefer. So I don’t find Zucker’s comments so far-fetched.

Anyone want to weigh in? If you use your real name you can sound off in the comments below. Or you can drop me a line at  peter@allthingsd.com.

But how much is too much when it comes to shelling out a little more for convenience, and are you really getting what you pay for? This week, I tested what could be thought of as the ultimate convenience: a box that plugs into your television and Internet connection, letting you download movies whenever you want to watch them. The box costs $399 and doesn’t include the price of movies, which must be rented or purchased for fees as high as $4 or $20 each, respectively.

This box, called Vudu, comes from a Silicon Valley company of the same name (www.vudu.com). Vudu’s biggest strengths are its easy setup, good picture quality and simple user interface, easily navigated using a scroll-wheel remote control.

Vudu costs $399 plus prices to rent or own each movie title.

If the director yelled “Cut!” right here, Vudu would be a box-office smash. But actually using this device is just one problem after another. For starters, though Vudu says it has relationships with the major Hollywood studios, many of the 5,000 titles it offers don’t seem to be popular by mainstream standards. Lots of them are old or obscure. For instance, you won’t find any of the “Pirates of the Caribbean” movies, but how about a 1984 sci-fi/fantasy movie called “The Ice Pirates,” instead?

If you do find a movie that you’d like to watch, you must have a bandwidth speed of at least two megabits per second to download it instantly; millions of broadband homes have slower connections than that. Vudu offers to measure your bandwidth on its home page before you buy it. I tested Vudu for a week on a typical home-type DSL line, and my connection only clocks about 1.5 Mbps, so it took me about 45 minutes to download each movie.

While Vudu’s $399 price tag might take some getting used to, its fees for buying or renting each movie could be harder to swallow after a month’s worth of use: as much as $80 if you bought one top-tier movie a week. Worse, you have to pay in advance. Rather than charging your credit card on a pay-as-you-go basis, Vudu customers must choose a $20, $50 or $100 amount at setup from which movie fees are deducted. When your account hits $0, the amount selected at setup is charged and the debit process begins again.

On top of all this, Vudu relies on a peer-to-peer network system for faster downloading. So, essentially, this company is using your bandwidth to help it save money it would have otherwise spent on its own servers and bandwidth.

I set up Vudu in a snap, plugging it into three things: a wall outlet, the back of a high-definition Sony Bravia television and an Ethernet cord. Wireless connections won’t work with Vudu without a special “bridge” or a power-line adapter. Once Vudu turned on, a friendly voice guided me through setting it up, and I got started in minutes.

Vudu’s home screen is broken down into five menus: Find Movies, New Releases, My Movies, My Wish List and Info & Settings. I used the tiny remote, which fits perfectly in a hand, and rolled through menus using its scroll wheel. This wheel can be pressed down to select something, saving me from glancing down at the buttons. Also, Vudu uses an RF (radio frequency) antenna so you don’t have to point the remote at it.

In Find Movies, I looked through 18 genres, including biography, romance, family and historical. A sorting feature can filter movies by release date, MPAA rating, critics’ rating, studio, availability to rent and availability to own. An on-screen alphabet can be used to type in names of actors, directors or movie titles; the scroll wheel speeds up this process.

Parental controls, which are only accessible with a special code, can be set to block a child from buying or renting movies with certain ratings.

Vudu likes to think of itself as the instant-gratification alternative to running to the video store. But not many people I know still go to Blockbuster for a DVD; instead, they use mail-delivery services like Netflix. Compared with the 85,000 titles offered by Netflix, the selection at Vudu is pretty slim. A more similar comparison might be Amazon’s Unbox for TiVo, which has slightly less than 5,000 movies.

Though I couldn’t find numerous titles, I did discover plenty of movies I’d never heard of. A search for last year’s “Casino Royale” returned Robert DeNiro’s “Casino” from 1995, as well as two Asian films, “Casino Tycoon” and “Casino Tycoon II.” Since I never saw Helen Mirren’s “The Queen,” I tried to find her Oscar-winning performance on Vudu. But the closest I came to royalty were “Barbarella: Queen of the Galaxy,” an alternative name for the cheesy 1968 Jane Fonda sci-fi flick, and “Prom Queen,” which fell under the Gay and Lesbian category. I tried to laugh this off by watching Steve Carell’s “Evan Almighty.” But typing “E-V-A…” into a title search only returned “Deliver Us From Eva,” an R-rated 2003 comedy starring LL Cool J.

I searched and found the same three titles on Netflix, though Amazon Unbox only had “Evan Almighty.”

I downloaded two romantic comedies: “Music and Lyrics,” starring Hugh Grant, a $4 rental, and a Diane Keaton movie called “Because I Said So,” which I bought for $20. I also rented “Zodiac,” a suspense movie starring Jake Gyllenhaal, for $4. Movies that you own never expire, but rented flicks must be watched within 30 days and expire 24 hours after you start watching.

In the case of each movie, the original estimates for time to download were daunting; two started out by estimating “Available in a few hours” and one movie’s estimate read “Available in a few days.” But all three finished downloading in about 45 to 50 minutes. Only one movie can download at a time.

While watching movies, the remote’s scroll wheel can be used to fast forward or rewind scenes. Scrolling faster moves you farther ahead or back (the fastest jump moves you 30 minutes); the slowest scroll moves you ahead or back five seconds.

Vudu might cast a spell on users who don’t mind its poor selection and high-bandwidth requirement to deliver instant downloads. But for me, the convenience of Vudu is no convenience at all. As is, its lackluster selection, high prices and slow downloads make it more of a letdown than anything else.

Edited by Walter S. Mossberg

Email mossbergsolution@wsj.com