Walmart and Online Video

Reuters reports that Walmart, the world's largest retailer, has purchased a video online site. they report:

"Wal-Mart Stores Inc will buy the fledgling Vudu online movie on-demand service, in a deal expected to close within weeks and pit the world's largest retailer against the likes of Netflix Inc.

Wal-Mart hopes to combine Vudu's technology with its own scale and expertise to get into a burgeoning market staked out by Netflix and other digital movie distributors, as viewers migrate to the Internet away from traditional movie rentals."

So what do you think they are thinking in Bentonville? How does online video sales mesh with the physical retail world?