Check it out. Walmart’s Vudu rentals is like the Bing of online-video rental. That means it’s #3, but by such a distance it almost doesn’t matter. iTunes has 65% share, followed by Zune video marketplace at 16% (a surprising 15.9 percent more than I would have guessed). Vudu is third, and while it’s up from last year’s 1% it’s still at 5%. Hey, that’s progress, and arguably Walmart’s first significant move into digital.

It’s a funny thing how markets settle with 2-3 main players. And in both the market of online-video rentals and search engines, the breakdown is strikingly similar.

Search share from July 2012 (via comScore): Google: 65%, Yahoo 18%, Bing at 14% and Ask and AOL scrounging for the additional 3% or so.

The lesson here, which is true for most markets and especially rapidly evolving tech markets, is that you generally want to be first or second. Failing that, go home or go in a different direction (props to AOL for its Patch success, which seems to be finally localizing content distribution in a consistant way).

That’s something to consider if you’re in the undifferentiated market of online-video streaming or filling that gap between video-sharing and social medias and various phone operating systems (iPhone, Android, etc). Hey- I wonder if the mobile operating system market will soon look like these cliff markets…

Did you ever see the footage I got of Microsoft’s Steve Ballmer? I asked him to do his “developers, developers, developers” or “windows, windows, windows” thing. But at the time he was all about advertisers…