Rumor: Wal-Mart to back UltraViolet digital downloads

Warner Bros., Universal Pictures and Sony could soon score a powerful new ally for their nascent digital distribution platform UltraViolet. According to insider talk, Wal-Mart will pledge support to the electronic sell-through and disc-to-digital service next week.

The LA Times reports that the retailer will announce the partnership during a press conference on March 13, offering both in-store and online options to customers:

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.

Such assistance could prove invaluable to the new initiative, which has already seen support this year from Amazon and Flixster. Analysts believe the platform has garnered over 800,000 active accounts with more than one million digital copy-enabled discs sold since its October launch.

Critics, however, have slammed UltraViolet for being consumer unfriendly and lacking in sufficient content. A plan that requires consumers to visit a store, prove they purchased a movie and still pay extra for a digital copy only supports the former complaint. And last month, Walt Disney Company CEO Bob Iger commented on the latter, admitting he was taking a “wait-and-see approach” toward the service. The motion picture and animation house remains a significant hold-out, instead developing its own digital distribution system, dubbed Keychest.

Frost & Sullivan Principal Analyst and streaming video expert Dan Rayburn has blasted UltraViolet, warning supporting studios that if they don’t begin to offer consumers low-cost digital content they would “see their business models crumble.” Market research group IHS revealed that disc sales have fallen dramatically in the past three years, leaving content providers out billions and fumbling for a turnabout.