money 'Survival of the fittest': Analyst details Walmart's path to streaming success
Walmart (WMT) is bundling a streaming service into its Walmart+ membership program.
The big box retailer has officially partnered with Paramount Global (PARA) to offer subscription services like Paramount+ and Showtime to Walmart+ members. The company was also in discussions with Disney (DIS) and Comcast (CMCSA).
The move underscores a strategic shift as Walmart looks to forge ahead in the retail wars and more adequately compete with the likes of Amazon (AMZN), which operates its own streaming service, Amazon Prime Video.
"This is survival of the fittest right now," Lopez Research's Maribel Lopez told Yahoo Finance Live in a new interview (video above.)
"Content is what creates stickiness in today's world, and Walmart's lacking that today," the analyst continued, although she cautioned against Walmart creating its own original content, citing sky-high production costs and the "enormous" amount of upfront capital that's required.
"If Walmart wants to contain its margins and have a content service, it really needs to think very seriously about being a channel for other content providers," she advised, calling it a "safer play" to go to market with other platforms to make the offer on the subscription side "more compelling."
She added that the move would also help differentiate Walmart during a time when consumers are increasingly fickle about the streaming services they subscribe to.
According to data from subscriber-measurement firm Antenna, cited by The Wall Street Journal, about 19% of subscribers to premium services — which includes Netflix (NFLX), Hulu, Apple TV+ (AAPL) HBO Max (WBD), among others — canceled three or more subscriptions in the two years up to June, compared to just 6% in the two-year period leading up to June 2020.
Walmart 'needs to get it right'
The Walmart+ membership, which currently costs $12.95 a month, includes free shipping on orders, discounts on fuel, in addition to a free six-month subscription to Spotify Premium (SPOT).
The company previously purchased a streaming service called Vudu but, amid high costs and increased competition, the platform was sold to Comcast’s Fandango in 2020.
"This is not Walmart's first rodeo in terms of looking at content," Lopez reiterated. "This time they need to get it right."
Editor's Note: This article has been updated to reflect Walmart selecting Paramount Global as a Walmart+ streaming partner
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
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