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More than a few TV sellers have been angling for a meeting with former Epix CEO Mark Greenberg since the The Wall Street Journal reported July 28 that the executive was consulting with Walmart on a prospective subscription video platform.
The retailer has yet to make the rounds with its vision for the type of ?content it could bring to ?its streamer — and may not until it has a top programming executive in place, a ?position that one agency source says Walmart is seeking to fill. Although it is still early, Hollywood observers say Walmart has been considering streaming play for several years, and another insider says the feeling among potential partners “is that they’re here to play.”
Starting a viable streaming business won’t come cheap, and Walmart,? a studio source tells The Hollywood Reporter, is expected to spend a couple billion dollars to launch its service. Since it doesn’t have a paid membership model, the retailer will be starting from scratch. Rival Amazon, meanwhile, ?is projected to spend $4.5 billion on content ?this year for Prime members, of which there are more than 100 million.
Wedbush Securities analyst Michael Pachter estimates that Walmart would need to spend at least $2 billion to $3 billion to make an impact on the U.S. market. That shouldn’t be difficult for the Arkansas-based company, which during its fiscal first quarter brought in revenue of nearly $123 billion, posted net income of 72 cents a share and had $7.9 billion in cash.
The launch of a subscription service would give Walmart entree into the small but growing club of Hollywood outsiders now looking to use media as a way to boost their businesses. Amazon was one of the first to make the move with the launch of its Prime Video product, which offers unlimited streaming of licensed and original fare to people who already pay more than $100 per year for free shipping on products like toilet paper.
Apple has also begun to invest heavily in programming as it begins to build up its yet-to-launch video product, and Facebook has rolled out community-driven original projects via its Watch video tab. Notably, the last major retailer to signal a plan to enter the streaming space was Overstock.com, which in 2015 said it would launch a video-on-demand service and, later, a subscription service for films and TV shows. It never materialized.
Walmart already has an entertainment play through video-on-demand marketplace Vudu. But ?one source familiar with the company’s plans ?confirms an earlier report by The Information that a subscription service would stand on its own and not ?be combined with the existing Vudu product, which offers a mix of free and paid film ?and TV titles. Though details are still being discussed, one option would be a Hulu-inspired tiered subscription plan, which in addition to a standard subscription could include a heavily discounted or free offering supported by advertising.
More challenging for Walmart would be bulking up on the licensed programming needed to drive customers to a new platform, something that has become harder since existing streaming players, especially Hulu, have already gobbled up SVOD rights to the most in-demand library fare. But Walmart is ?expected to go after shows with appeal to Middle America — where its retail stores are most popular — which could give it an advantage in the crowded streaming market.
“Its customer base likely comprises the last group of potential streaming users who haven’t yet chosen a service,” notes Pachter. “Walmart likely believes it can attract these customers as they see greater penetration of smart TVs or smart devices in Walmart customer households, and they may be right.”
A Walmart spokeswoman declined to comment on its streaming plans.
A version of this story first appeared in the Aug. 8 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
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