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Vudu’s popularity increases while Microsoft and Sony lose market share

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Walmart-owned Vudu moved into third place for video streaming as reported by IHS today. In the first half of 2010, Vudu only had about one percent of the market, but leaps to just over five percent in the first half of 2011. This catapults Vudu over Amazon’s streaming service as well as video streaming on the Sony PlayStation 3. While Amazon’s market share slightly increase from 4 percent in 2010 to 4.2 percent in 2011, Sony’s share plummeted from 8.2 percent in 2010 to 4.4 percent in 2011. Microsoft also lost market share on the Zune Video Marketplace on the Xbox 360 from 18.5 percent in 2010 to 16.2 percent in 2011. Sitting firmly in first place, Apple’s market share went up slightly by nearly one percent.

Beyond taking advantage of the PlayStation Network outage, Vudu’s rise in popularity is likely due to high-quality video encoding options as well as aggressive rental sales. Vudu typically offer multiple video qualities and price points on most new releases including standard definition (SD), 720p high definition (HD) and 1080p high definition (HDX) at 24 frames per second. Standard definition is allowed on all devices, but HD and HDX require an authorized device like a PlayStation 3 or a Boxee Box. The quality of the streaming video is typically dictated by the speed of a consumer’s Internet connection.  HDX, for instance, requires speeds of 4.5 Mbps or above to stream without interruption.

Earlier this month, Vudu announced a customized version of the website compatible for streaming video on the Apple iPad. This move allows Vudu to circumvent Apple’s required revenue split on content purchases through a Vudu app. In addition, Vudu doesn’t have to be dependent on Apple’s approval process to roll out updates and new content to iPad owners. The site is also being customized for other mobile devices including Android smartphones. iPhone owners can access the iPad version of the site to watch movies, but it hasn’t been optimized for the popular smartphone yet.