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Analyst describes Walmart’s path to streaming success
August 15, 2022
Walmart (WMT) bundles a streaming service into its Walmart+ membership program.
According to The Wall Street Journal, the big box retailer has officially partnered with Paramount Global (PARA) to offer subscription services such as Paramount+ and Showtime to Walmart+ members. The company was also in talks with Disney (DIS) and Comcast (CMCSA).
The move underscores a strategic shift as Walmart wants to move forward in the retail wars and better compete with Amazon (AMZN), which operates its own streaming service, Amazon Prime Video.
“This is survival of the fittest right now,” Maribel Lopez of Lopez Research told Yahoo Finance Live in a new interview (video above).
“Content is what creates stickiness in today’s world, which Walmart lacks today,” the analyst continued, though she warned Walmart to create its own original content, citing skyrocketing production costs and the “huge” amount of upfront required. capital.
“If Walmart wants to cut its margins and have a content service, it really needs to think seriously about being a channel for other content providers,” she advised, calling it a “safer game” to go into the market with other platforms. the offer on the subscription side “more attractive”.
She added that the move would also help differentiate Walmart at a time when consumers are becoming increasingly fickle about the streaming services they subscribe to.
According to data from subscriber measurement company Antenna, quoted by The Wall Street Journal, about 19% of subscribers to premium services — including Netflix (NFLX), Hulu, Apple TV+ (AAPL) HBO Max (WBD), have canceled three or more subscriptions in the two years to June, compared to just 6% in the two years to June 2020.
Walmart ‘must do it right’
The Walmart+ membership, which currently costs $12.95 per month, includes free shipping on orders, discounts on fuel, in addition to a free six-month subscription to Spotify Premium (SPOT).
The company previously bought a streaming service called Vudu, but amid high costs and increased competition, the platform was sold to Comcast’s Fandango in 2020.
“This isn’t Walmart’s first rodeo in terms of content,” Lopez reiterated. “This time they have to do it right.”
Editor’s Note: This article has been updated to reflect that Walmart has reportedly selected Paramount Global as a Walmart+ streaming partner