Walmart is already one of the biggest retailers in the world, but now they are considering moving into the streaming home entertainment market to take on Netflix and Amazon and they hope that a lower price point will be the key. Though Walmart overall is larger in terms of revenue, Amazon is more valuable than Walmart, Costco and Target combined because it is not a chain of retail stores– they don’t have to spend money on maintenance, amenities, upkeep, etc. They also advertise much and don’t have to worry as much about competitors. The other major retailers, including Walmart, are experiencing the crunch of losing sales to the online giant and offering a streaming service could help offset that.
The biggest problem with that is that Walmart would have to spend billions to launch a service and there’s no guarantee that it will be successful. They already bought the on-demand service Vudu, which has not taken off. And they don’t produce their own entertainment. Neither did Netflix or Amazon at first, but it’s now the major draw to subscribers. This year, Netflix may spend $3 to $4 billion, which may or may not work in their favor. (For every ‘Stranger Things‘, there’s ‘The Getdown’.) A hefty amount, but one that Walmart could handle. The question is, will they. Even if Walmart rebounds, the temporary loss may be too much for their corporate heads and investors.
There are MANY variables, but Walmart may have some tricks up its sleeve, like partnering with (or even buying) smaller unattached cable brands, production companies or even a studio in order to build up a decent sized back library and develop new projects.
The plan is for Walmart’s streaming service to cost $8 or less. Netflix has been steadily increasing its rates and now charges between $8 and $14 a month, while Amazon Prime Video charges $8.99. Hulu (which isn’t mentioned in the report at all) is $7.99 a month or $39.99 for Hulu with Live TV. Walmart has a stronger customer base in Middle America and the South and believes that their service could make inroads in these regions, as Netflix and Amazon are “seen” as being more popular on the East and West Coasts.
But that could work against it. Walmart’s decidedly red state image– they still only sell censored CDs– wouldn’t appeal to adults who want more sophisticated (and potentially controversial) entertainment. There’s no way Walmart or a subsidiary would produce ‘The Handmaid’s Tale’, ‘Orange Is The New Black’, ‘Dear White People’ or even ’13 Reasons Why’.
A Walmart service would also have to contend with new upstart rivals. Apple is taking a small step into developing its own original programming. Facebook is attempting something called Facebook Watch. And Disney and Warner Brothers/DC Comics are launching their own services, which are extremely niche. This brings up the fact that the streaming market is getting awfully crowded. And bear in mind many still use cable and satellite or some other alternative. How many entertainment outlets does one household need?
Considering how huge and powerful Walmart is, they may be able to pull this off. But as much money as the company makes, it has the reputation for having the cheapest prices, not the highest quality. As stated, this is just something Walmart is bouncing around. But if they offered a decent streaming service for cheaper than all the others, would you be tempted to switch?
Source: The Information