New reports suggest Walmart may seek to compete in video streaming market

Walmart is not new to video streaming. The retail giant acquired VUDU in February 2010, but it has fallen far behind subscriptions to Amazon Prime, Hulu, Netflix and other popular platforms such as YouTube.

The Information recently reported Walmart was planning to launch a subscription service for streaming television series, documentaries and movies by using its VUDU platform which was integrated on Walmart.com in 2011. For now the service allows users to rent or purchase digital programming on an a la carte basis (individual or bundle).

Walmart told Talk Business & Politics it does not respond to rumors and had no comment. Still, citing insiders The Information reports Walmart is mulling the possibilities of investing in original content as does Amazon, Netflix and other leading streaming services. Walmart’s streaming service is expected to hit the market by late this year or early 2019 with a focus on middle America at a value price of $8 a month, according to The Information.

The media streaming sector is a crowded space and t looks as if Walmart is late to the party, after having dipped its toe in the water as far back as 2010. Walmart continued to sell bins of DVD titles in its stores for $5 a piece and then sometimes less for years, but consumers are buying fewer copies of their own, instead choosing to stream on demand.

Walmart has added commercial content to hundreds of titles that are now offered on VUDU for free streaming. But Walmart has a lot of work to do to catch up with Amazon and Netflix, according to Mark Ryski, CEO of HeadCount Corporation.

“Walmart can have an impact in any segment it chooses to compete – including streaming video – but that doesn’t mean it will be successful or that it should. The battle in streaming video is content and content.development, and that’s why Netflix and Amazon are investing heavily into it,” Ryski noted in recent blog. “The market is already highly competitive and creating quality content is very difficult to do. With so many other more important areas to focus on, I don’t see any significant upside for Walmart pursuing the video streaming segment.”

Marketing firm comScore reported Hulu, YouTube and Netflix were the most watched streaming services in January. Hulu recorded nearly 30 hours of viewing per household, YouTube and Netflix had 25 hours of viewing per household. Amazon had about 12 hours of viewing per household. HBO Go had seven hours and VUDU viewing averaged about 2 hours, similar to ESPN and Fox Now.

Consumers are binge-watching more, according to comScore, original series are also a big draw for Netflix and Amazon. The cost of major release movies on VUDU cost more than a full month subscription to Netflix or Amazon Prime, and this would have to change if Walmart VUDU is to become a major player.

The streaming market is expected to reach $84 billion by 2022, according to comScore. Last year the sector had a market cap of $35 billion with average households using between three and four streaming services. Netflix reported 125 million global subscribers in the first quarter of this year. Roughly 57 million of those are in the U.S. Amazon reports more than 100 million Prime members worldwide and roughly half of U.S. households are Prime members and get streaming services as a perk. Hulu has amassed some 17 million subscribers

“I guess given enough time and money there’s a slim chance for viability, but the bigger question is, why? Does offering video make a Walmart customer stickier to the brand? With all the choices already on the market it’s hard to see how Walmart will get enough share to be worthwhile,” said Peter Charness, senior vice president of TXT Retail. “Amazon does video to keep customers feeling good about the value of the increasing Prime membership fee. Walmart is running on a ‘no membership needed’ basis. Copying Amazon step for step as part of a digital strategy for Walmart makes little sense to me.”

Walmart has relationships with studios, actors and deep enough pockets to try its hand at original programming, but the payoff can be a long time coming, according to OrderDynamics marketing exec Charles Dimov, who said management has to realize it can’t be monitored quarter-to-quarter.

Walmart also has to overcome user complaints if it’s to become a serious contender. VUDU doesn’t get good ratings with TrustScore, getting just 2.2 out of 10 on the TrustPilot site. Recent complaints against VUDU include poor customer service, issues working with Roku, and movies freezing up. It took one user four days to get the code to watch the movie after they paid for it.

Shep Hyken, of Shepard Presentations, said although Walmart has the size and scale to move into any business it might be better a play for them look for partnership opportunities with larger players in the space. He said aligning with Netflix or Hulu could be smarter play.

“It will be an uphill climb, but more power to them,” said John Andrews, CEO of Prevailing Path and co-founder of Collective Bias, and formerly of Walmart.

It’s anyone’s guess who Walmart might hire to help them with this agenda. Jason Ropell, head of Amazon’s film studio, is leaving that post in the next few months. Amazon said it is looking for a replacement. Ropell is credited with scaling Amazon’s content production to serious Hollywood status garnering its first Oscar nomination last year for the original film Manchester By the Sea.