Just a day after closing its MP3 music download offering, Wal-Mart Stores Inc. (NYSE: WMT) has launched a streaming video service for the iPad from Apple Inc. (NASDAQ: AAPL). Walmart already offers streaming video to devices like computers, HDTV boxes, and game controllers through its Vudu video-on-demand service. Adding the iPad was a necessary move, but it’s hard to see how this will help the world’s largest retailer much.

For one thing, the new service competes with streaming services from Netflix Inc. (NASDAQ: NFLX) and Amazon.com (NASDAQ: AMZN), as well as these companies’ TV services and Google TV from Google Inc. (NYSE: GOOG). For another, the Vudu application is not an iPad app, but an icon on the iPad’s screen that sends users to the Vudu website to rent or buy movies. The icon feature lets Walmart avoid the 30% payment Apple charges for any content sold through an iPad app.

Walmart’s prices for streamed content ranges from $1 to $5.99 per title. The company does not offer a subscription service comparable to Netflix or Amazon and the Vudu service is priced higher than the CinemaNow service offered by Best Buy Co. Inc. (NYSE: BBY). Coinstar Inc. (NASDAQ: CSTR), which owns the ubiquitous Redbox kiosks, is also believed to be about to enter the crowded video-streaming market with a low-priced streaming service.

Even if Walmart’s streaming service were to jump to Netflix levels, the Bentonville, Arkansas, giant would realize less than $1 billion in additional quarterly revenue, less than 1% of Walmart’s total. Chances of this happening are slim and none.

So what does Walmart hope to achieve? For one thing, this could help boost sales of electronics gear, which is the company’s second biggest seller after groceries. HDTV boxes, game controllers, PCs, laptops, iPads, and other tablets could now include a trial offer for the Vudu service. For customers just getting started with streaming video, a simple and cheap way to sample streaming video could turn into a preference. If Walmart can move the needle even a little on sales of electronics gear, it will help both the top and bottom lines.

For another thing, the market for streaming video remains volatile. Netflix and Amazon dominate, but Netflix’s new subscription plan has many subscribers grumbling. A move by Walmart to some sort of low-priced subscription service seems inevitable. Such a move might not cause serious problems for revenues at either Netflix or Amazon, but Netflix stock could feel some pain.

The availability of Vudu on the iPad is another toe-in-the-water move from Walmart that could pay off nicely down the road or tank completely, like the company’s MP3 music service. It’s not a very costly gamble no matter what happens.

With the market down nearly -4% just before noon, Walmart shares are off nearly -3.25%, at $48.84, in a 52-week range of $48.67-$57.90. Netflix shares are off about -2.35%, at $232.23, in a 52-week range of $113.20-$304.79. Netflix shares have lost more than -20% since setting the 52-week high less than a month ago.

Paul Ausick

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