NEW YORK (

TheStreet

) --

Wal-Mart

(WMT) - Get Report

is stepping up the competition in the movie rental business with the acquisition of

Vudu

.

The retail giant announced on Monday that it is buying Vudu, an online movie service that is built into high-definition television and Blu-ray players, according to the

New York Times

.

The terms of the agreement were not revealed.

While Wal-Mart has been the largest seller of DVDs, with this acquisition it is now encroaching on the domain of

Netflix

(NFLX) - Get Report

and

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Blockbuster

(BBI) - Get Report

.

Netflix has become the golden child of the DVD rental/streaming business, as it continues to steal market share away from traditional movie-rental retailers like Blockbuster.

Last week, Blockbuster said it is attempting to cut its overall number of stores, and the amount it pays in rent for those stores. Standard & Poor's cut its rating on the company to deeply distressed, and said Blockbuster is vulnerable to debt default.

Still, shares of Blockbuster are recovering this week, up 7% to 40 cents in afternoon trading.

Shares of Netflix are falling 2.8% to $64.84 on the news.

There has also been increasing competition from

Coinstar's

(CSTR) - Get Report

Redbox kiosks.

The purchase of Vudu may also present Wal-Mart with the opportunity to sell other products through televisions in the future.

-- Reported by Jeanine Poggi in New York.

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