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According to a report earlier this year, Walmart wants in on the digital video streaming game.  Not only would this be yet another subscription video service in the booming industry, but it would also be yet another clapback at Amazon to fuel the fire between the two retail giants.

Walmart acquired its video-on-demand service Vudu in 2010, which allowed users to rent or purchase movies. To expand on this, Walmart seeks to create original content (in the works thanks to their partnership with MGM) in addition to licensing television shows and movies.

The transition is a logical one; the market has seen consumers cut the cord of traditional tv and switch to digital video for the past several years.

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The percentage of survey participants identifying themselves as cord cutters surged over the summer after holding flat through late 2017 and the early part of 2018

However, a question does arise: Is Walmart too late to the game? According to Tony Maroulis, research manager at Ampere Analysis, “the U.S. market may be near saturation in terms of new homes that are willing to pay for streaming.”

Can Walmart acquire users? Just Sixteen percent of broadband homes subscribe to three or more services, and nearly two-thirds already have one of the big three (Netflix, Hulu, Amazon). Walmart may feel that the growing market of cord-cutters will increase the population and create more room, but there are still limits to consumer spending.

It will certainly be an uphill battle – Netflix already commands half of U.S. households as customers, with an $8 billion annual programming budget. Reportedly, Walmart will charge $8 a month for Vudu, which could help it obtain wallet-share. Netflix’s rates keep rising, and as video-streaming becomes more ubiquitous the platform itself will become less novel in the face of price.

 

From a marketing management perspective, here are some questions to consider:

  • How might Walmart formulate a promotional strategy that reflects the needs of today’s media customer? What would that look like?
  • How will Vudu retain and build its userbase? What will keep customers loyal?
  • How might Walmart integrate Vudu into its retail umbrella? Are there opportunities to innovate with cross-selling?