Vudu Slashes Hardware Prices by 50%, Compensates Dealers

With competition getting fiercer by the minute, Vudu is slashing the prices of its IP-based video-on-demand boxes.

The flagship Vudu HD (read our review) is now selling at Best Buy for $149 – half the original price tag of $299 for the 250 GB Internet movie player.

The custom-oriented Vudu XL also gets a 50-percent price cut to retail for $499. And the top-of-the-line XL2 is now $799, compared to the original $1,300.

Vudu's custom resellers shouldn't despair. The company will provide one free box for every Vudu HD or Vudu XL that is in stock and not yet activated.

The price cuts come in the wake of stiff competition from the likes of Netflix, Amazon and Hulu. Netflix is now supported by numerous devices including the $99 Roku Digital Video Player, Xbox 360 and some TVs and Blu-ray disc players.

Netflix subscribers can watch as many on-demand videos as they want for no additional fees.

Amazon's video-on-demand can be enjoyed on select TVs and other CE devices on a pay-per-view basis.

And then there's Hulu.com and similar sites that offer free TV shows and movies at no cost to customers.

Vudu may not yet offer as many videos as the big guys, but it does boast the highest quality video resolutions at 1080p, as well as the largest HD library.

The Vudu library now includes more than 13,000 movies and TV shows, including more than 1,300 HD titles.

"At the end of the day, we are the premium play in the market," says Vudu channel manager Mark Donnigan. "No one has challenged us there."

The company (obviously) doesn't attribute the cost reduction to increased competition.

Instead, says co-founder Edward Lichty in a statement, “We are reaping the rewards of success in the retail channel over the holidays, lower component prices and higher movie revenues."

Vudu said recently that its ultimate goal is to OEM its platform to third-party device manufacturers, a la Netflix, Amazon and others. At the same time, the company said it would continue to make boxes for the retail and custom channels.