* For $2-$5 apiece, will convert discs for Internet viewing

* Consumers may be reluctant to buying online movies -IHS

March 13 (Reuters) - Wal-Mart Stores Inc is adding its retail heft to Hollywood's effort to convince U.S. consumers to buy and store movies on the Internet, as DVD and Blu-ray sales continue their downward spiral.

Starting April 16, the top U.S. retailer will offer customers at 3,500 of its stores the option to store their DVDs in digital form on Vudu -- its fledgling Internet streaming site -- for $2. That fee rises to $5 for high-definition versions.

Wal-Mart, traditionally one of the largest sellers of DVDs, will team up with Sony Corp, Viacom Inc's Paramount, Comcast Corp's Universal, Time Warner Inc's Warner Bros and News Corp's 20th Century Fox on the offer. The retailer's Vudu customers will also then be able to access Ultraviolet, the five studios' own movie digital-locker service.

Hollywood is trying to revive interest in movie ownership with Ultraviolet, which allows viewing anytime from Internet-connected devices. The consortium that runs Ultraviolet, in an announcement at the Consumer Electronics Show in Las Vegas, said studios would offer hundreds of titles with the Ultraviolet option this year, up from a paltry initial 19.

Walt Disney Co has its own competing service.

Consumers are shifting to lower-priced rentals from companies such as Netflix Inc and Coinstar Inc's Redbox kiosks, eschewing outright ownership. Netflix charges $7.99 monthly for unlimited movie-streaming, while Redbox takes just over $1 per disc.

U.S. consumer dollars spent on home entertainment -- including DVDs, video on demand and online streaming -- slipped 2.1 percent to $18 billion for the year, according to industry group DEG: The Digital Entertainment Group.

It remains to be seen whether the Vudu-Ultraviolet pairing will entice viewers, who have so far been cool to Ultraviolet. IHS estimated in a Tuesday report that home-video spending as a proportion of all spending on movies slipped to less than 30 percent in North America and Western Europe, from 40 percent at the peak in 2004.

Consumers have also been reluctant to pay for movies online, the research outfit said. Purchases and rentals of digital movies accounted for just 2 percent of North American movie spending last year.

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