It’s easy to see why everyone wants a piece of the streaming market. Netflix (NASDAQ:NFLX)first introduced Watch Now — the earliest version of its internet-delivered video service — in January 2007. The platform began with just 1,000 titles and was an added perk to those who subscribed to the company’s DVD-by-mail service.
This article originally appeared in the Motley Fool.
At the time of its streaming video debut, Netflix had just 6.3 million subscribers. Those numbers have since exploded, growing to over 130 million at last count, making Netflix arguably one of the most successful companies of the past decade.
That unbridled success has been a magnet for competition, with a growing number of services joining the fray. Now, it appears Walmart (NYSE:WMT) is contemplating throwing its hat into the streaming ring.
Save money, live better, stream video?
Walmart, the world’s largest retailer, is reportedly considering a streaming service that would compete with incumbents like Netflix, Amazon.com’s (NASDAQ:AMZN) Prime Video, and Hulu. Walmart is mulling how best to carve out a niche in the increasingly crowded field.
One potential path would be by undercutting the major players on price and charging about $8 per month, which would be less than the most popular services. Netflix plans start at $7.99 per month and can go as high as $13.99 for multiple concurrent streams and HD. Amazon Prime membership costs $119 per year, which works out to about $9.92 per month, though those looking for the convenience of paying monthly are charged $12.99. Hulu viewers part with $11.99 monthly to avoid commercials, or $7.99 for the ad-supported tier. Walmart is also considering a free, ad-supported service.
Walmart believes that there is a compelling opportunity by providing a service that targets its existing customers, particularly those in Middle America, theorizing that the larger competitors are more focused on demographics found on the East and West Coasts.
It isn’t clear how Walmart plans to populate a streaming platform. The company could opt to host programming produced by others, acquire a studio or other content producers, or get into the original programming business itself. Developing its own original content has proved particularly successful for Netflix, but Amazon and Hulu have also seen positive results with their self-produced originals.
History repeating itself
This isn’t the first time Walmart and Netflix have battled over customers. Walmart sought to challenge Netflix in the DVD-by-mail rental business with its own offering in mid-2003, but shuttered its service less than two years later and ported its customers over to Netflix.
It also isn’t Walmart’s first rodeo when it comes to internet content delivery. The company previously acquired on-demand video service Vudu in 2010, where viewers can rent movies for less than $1, or watch ad-supported programs as part of Vudu Movies on Us, which Walmart launched in late 2016.
Everybody wants a piece of the action
Walmart isn’t the only company contemplating the massive opportunity presented by streaming. Disney plans to debut a namesake over-the-top service late next year, populated by movies and television programs from its Marvel, Pixar, Lucasfilm, and Disney studios — as well as original content developed strictly for its soon-to-be-launched service. Apple has been making its own headlines lately, signing deals with a growing roster of A-list Hollywood talent and spending $1 billion this year for content creation. It isn’t clear if Apple plans to launch its own streaming video service, or to continue to offer the fruits of its labor as an added bonus to its streaming music customers.
Walmart’s ambitions may be less about streaming video and more about finding other venues in which to challenge archival Amazon. Walmart has been ramping up its e-commerce operations in recent years, with major purchases like Jet.com and its recent controlling stake in Flipkart, India’s largest online retailer.
Whatever its motivation, this is an interesting move by Walmart, and one we are sure to hear about more.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena owns shares of Amazon, Apple, Netflix, and Walt Disney and has the following options: long January 2019 $85 calls on Walt Disney. The Motley Fool owns shares of and recommends Amazon, Apple, Netflix, and Walt Disney. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.