NBC Universal is continuing its arms race against streaming foes Netflix and Amazon Prime, agreeing to terms with Walmart, which will sell its movie and TV rental service, Vudu, to NBCU’s movie ticketing company Fandango.
No terms were announced, and the deal isn’t expected to close for a few months, but NBCU – and parent Comcast – likely got a rollback price on the service that hasn’t really gained the traction in the market Walmart had hopped for when it bought the service to supplant its in-store DVD business in 2010 for north of $100 million.
Walmart reportedly has been shopping the streaming service since late last year, and NBCU was interested early. Comcast is hoping it can leverage a Vudu-infused Fandango as a low-cost alternative to Netflix and other streaming services like AT&T’s HBO Max (which is now poised to launch next month). Vudu also has an ad-supported segment of its business that NBCU is hoping will buoy its own ad-supported streaming service, Peacock. Peacock just started its rollout a week ago.
Vudu has reach, but little adoption
Walmart claims Vudu reaches 100 million connected devices in the US and has reported more than 30 million monthly visitors a month.
In mid-2018, rumors circulated that Walmart was weighing creating its own original content to blend with existing content for a service that would be aimed at “middle America.” But the cost of originals apparently was off-putting enough to prompt execs to pull back and – eventually – put Vudu on the block. Nevertheless, Walmart has dallied in creating originals, last year reprising Mr. Mom.
Vudu has pressed on despite a generally soft transactional video market in the US, trailing industry lead iTunes and Amazon in terms of movie and TV episode sales. Despite being routinely preinstalled on a number of TV brands and streaming devices (remember that 100 million connected devices?), adoption has been only modest.
Vudu will continue to power Walmart’s digital movie and TV store and customers will have access to their content lockers. The Vudu service included 10,000 ad-supported titles and 150,000 titles that could be rented or purchased, including some 4K content.
The deal makes Walmart the second major brick and mortar retail to try – and eventually abandon – its efforts to play in the streaming world. Target had a short-lived play, Target Ticket, that lasted just 18 months before the retailer pulled the plug.
The bottom line
Traditional broadcast networks are struggling as viewers increasingly turn to streaming services. Can Vudu supply some magic for NBCU and parent Comcast as they try to compete with Amazon and Netflix? It’s doubtful. Comcast and NBCU execs continue to fight a battle that consumers and streamers like Netflix and Amazon have already walked away from: ads as a source of revenue.
During the Covid-19 pandemic, advertisers have pulled their budgets from broadcast, cable and streaming services. And it’s remained tough sell to draw consumers to “free” content versus subscriptions, even as the economy struggles.
Will that equation flip? Nope.
Stay tuned – and stay well.