‘Survival of the fittest’: Analyst details Walmart’s path to streaming success

‘Survival of the fittest’: Analyst details Walmart’s path to streaming success

Walmart (WMT) is bundling a streaming service into its Walmart+ membership program.

According to The Wall Street Journal, the major retailer has officially partnered with Paramount Global (PARA) to offer subscription services like 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 seeks to move forward in the retail wars and compete more appropriately with companies like Amazon (AMZN), which operates its own streaming service, Amazon Prime Video.

“This is survival of the fittest right now,” Lopez Research’s Maribel Lopez said in a new interview with Yahoo Finance Live (video above).

“Content is what creates stickiness in today’s world, and that’s what Walmart is missing today,” the analyst continued, though she cautioned against Walmart creating its own original content, citing the sky-high production costs and “enormous” volume of upfront capital required.

“If Walmart wants to contain its margins and have a content service, it needs to be really, really serious about being a channel for other content providers,” she advised, calling it a “safer game” to enter the market with other platforms offering on the subscription page “convincing”.

She added that the move would also help differentiate Walmart at a time when consumers are increasingly fickle about the streaming services they subscribe to.

According to data from subscriber-measuring company Antenna, cited by the Wall Street Journal, about 19% of subscribers to premium services — including Netflix (NFLX), Hulu, Apple TV+ (AAPL), and HBO Max (WBD, among others) — have canceled three or more months more subscriptions in the two years ended June, compared to just 6% in the two years ended June 2020.

Walmart “must do it right”

CHINA - 2022/07/25: In this photo illustration the American multinational department store Walmart logo displayed on a smartphone screen.  (Photo illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

CHINA – 2022/07/25: In this photo illustration the American multinational department store Walmart logo displayed on a smartphone screen. (Photo illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

Walmart+ membership, which currently costs $12.95 per month, includes free shipping on orders, discounts on fuel, and a free six-month subscription to Spotify Premium (SPOT).

The story goes on

The company previously bought a streaming service called Vudu, but faced with high costs and increasing 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 chosen Paramount Global as a streaming partner for Walmart+

Alexandra is Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]

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