Asda looks to buy its way into digital entertainment

The grocer is considering whether to follow rivals Tesco and Sainsbury’s into the sector, which includes music downloads, film streaming and ebooks, as it aims to bolster its multichannel credentials.

Asda parent Walmart bought online movie service Vudu in the US in 2010, and Asda Direct trading director Frazer Locke said the UK grocer is deciding whether to launch the service here or offer something different.

He said: “We need to understand more about what is the right proposition to offer – is it a download-to-own model, a subscription model, pay per view, all of these or something new?

“The challenge will be in developing a profitable model, as there’s a lot of technology involved. It’s about deciding where to invest appropriately. The books and music market is saturated by Amazon and Apple, but we would be foolish to overlook them as options.”

Tesco and Sainsbury’s have made a flurry of acquisitions in the sector in the last year. Tesco has acquired a £10.8m stake in digital music platform We7 in June and ebook provider Mobcast in September while Sainsbury’s purchased HMV’s stake in e-book business Anobii in June.

Locke said that Asda is bolstering its online offer. It is trialling a service created in conjunction with etailer Mydeco.com which allows shoppers to build a virtual version of a room in their home by entering measurements online. The service, which will eventually also allows shoppers to upload photos of their rooms, allows shoppers to see how large furniture items will look in their own home.

Asda is expected to reveal a strong third quarter when Walmart reports on the period today.