• by Alex Weprin , July 18, 2018

The news reverberated across the streaming video and retail ecosystem Tuesday evening: Walmart is thinking of getting into the streaming video game.

According to The Information, which broke the news, Walmart could try and undercut both Amazon and Netflix on price, or launch an ad-supported video service that could also help drive online retail sales.

Streaming video is a crowded market, with subscription giants like Netflix, Hulu and Amazon holding a fairly commanding lead, and ad-supported and niche video services still trying to find solid footing. 

A quick survey of executives in the streaming video and programmatic video ad space suggested significant skepticism about Walmart’s plans to enter the space.

While Walmart does sell and rent digital copies of movies and TV shows through its Vudu service, taking the next step to streaming video greatly complicates matters.

The biggest problem: Walmart would need to build a content library large enough to support subscriptions or to gain market share, and if it chooses to have ads, it would need to build an ad business as well.

Walmart is one of the largest buyers of ads, but selling requires a new skill set. 

“They could probably ramp up a programmatic video business pretty quickly, but to launch direct sales would take a lot of time and investment,” an executive at an ad-tech firm tells Digital News Daily.

Of course, content is the biggest problem. If Walmart wanted to launch its own original content, it would require a dedicated team and significant lead time. Apple, for example, is investing nine figures into original content, and has been developing shows for nearly two years. None of them have launched yet.

If Walmart wants to acquire library content, it faces significant challenges. Netflix, Hulu and Amazon have gobbled up most of the biggest shows and movies, with some content owners, like Disney and Viacom, holding on to their best programming so they can launch their own streaming offerings.

“At this point the best rights deals are all accounted for, and what is left is lower-quality stuff, or one-off shows that just don’t add many hours,” an executive at a competing streaming video service tells Digital News Daily.

There are, of course, non-exclusive rights to be had. Free services like Tubi and Roku Channel have libraries of nonexclusive movies and TV shows, while Sony’s Crackle combined shows from Sony’s library with exclusive original programming and non-exclusive acquired shows.

The time and resources needed to gain a foothold in streaming raise another problem: by the time a streaming service launches, the market will be even more crowded, and existing leaders may be even more entrenched.

If Disney has a compelling streaming service with 3,000 hours of exclusive content priced at $3.99 per month, Walmart will need a service that can compete on the merits, and there is no clear path to get there without spending big on exclusive content. 

The barrier to entry for a free, ad-supported service is lower, but still requires some sort of content investment. Nonexclusive titles and a few exclusive shows (say, for example from Viacom’s new MTV Studios unit) could be enough to launch, though such an offering would find a crowded field, and would need a plan for differentiation.