Walmart is now offering a Paramount (PARA)+ subscription as a benefit to subscribers to Walmart+, its online shopping and free delivery service. Adding the streaming platform is Walmart’s latest attempt at a video strategy after multiple failures, and one that very much appears to be patterned after Amazon (AMZN)’s Prime Video.
For the last decade, Walmart and Amazon have jockeyed to become the U.S.’s biggest store. The retail giants have about the same number of customers, and while Walmart still sells more on a yearly basis, the e-commerce giant is catching up quickly, increasing its revenue tenfold in 11 years. Adding Paramount+ to its Walmart+ subscription is an indicator that Walmart, a company that once set the rules in the retail economy, is now following them.
Walmart’s long, flawed history with video services
Walmart’s deal with Paramount+ follows 20 years of its attempts to deliver video service offerings that have been marked by “poor visibility into the market, poor execution, [and] not understanding what the customer wanted,” said Dan Rayburn, a streaming media analyst formerly at Frost & Sullivan and currently the chairman of the National Association of Broadcasters’ Streaming Summit.
Walmart launched a DVD rental service in 2003 to compete with Netflix, which at the time delivered DVDs by mail, then folded just two years later after striking a mutually beneficial deal with Netflix. Walmart would guide its existing 200,000 subscribers to Netflix, and Netflix would advertise Walmart’s movie offerings on Walmart.com, the online shopping website which launched in 2000, to its 3 million subscribers.
In 2006, Apple began offering movie downloads through iTunes so the next year, Walmart created its video download service. After just 10 months, HP, the company powering Walmart’s service, discontinued the technology, saying the market didn’t perform as expected. Walmart did not continue the service with another tech company.
In 2010, Walmart bought Vudu, a three-year-old company allowing users with televisions or Blu-ray players capable of connecting to the internet to rent and purchase movies instantly. Vudu had deals with most major studios and offered around 16,000 titles including movies from the Twilight, Harry Potter and Hangover franchises. The $100 million deal allowed Walmart to compete with Best Buy, Amazon, Blockbuster and Netflix (again), which all had similar video-on-demand services.
Walmart never reported Vudu’s subscriber count or any material impact Vudu had on Walmart’s financials to Wall Street, meaning it likely didn’t have a significant impact on the company’s revenues or profits, said Rayburn.
In 2018, Walmart tried to make Vudu a success by announcing it would work with MGM, a movie studio that would produce exclusive content for Vudu. Neither party announced any content that was made.
Walmart sold Vudu to Comcast-owned Fandango in 2020, five months before launching Walmart+. Walmart also experimented with a disk-to-digital DVD conversion service in 2012 and its own subscription video service to rival Netflix in 2018, neither of which lasted.
When it comes to digital video content, Walmart falls under the same category as Blockbuster and Redbox, a video rental kiosk, Rayburn said. Just because they have great traffic at their physical locations doesn’t mean they can have the same success as a digital brand. “And no one thinks of Walmart as a digital brand,” he said.
Offering Paramount+ as a benefit is a much lower stakes deal for Walmart. The retailer will pay a discounted rate of the $5.99 Paramount+ subscription cost for some of the 11 million Walmart+ members who use the service. The benefit will likely cost Walmart somewhere in the tens of millions, but for a company that made $470 billion in sales in 2021, it won’t make much of a dent.
Walmart+ and Paramount+
Walmart isn’t offering Paramount+ to rescue itself, said Charles Fishman, author of The Wal-Mart Effect, a book about Walmart’s economic impacts on local and global communities.
“No one is going to say, ‘Let’s buy our turkey breast and pasta from Walmart because they added Paramount+,’” he said. But they might be tired of paying for multiple streaming services and see Walmart+ as a way to get their grocery shopping done along with getting a free video subscription. It also may make subscribers think twice before quitting Walmart+ because they’d lose Paramount+ as well.
For non-Walmart+ subscribers, Paramount+ starts at $4.99 per month and streams shows including Halo, Star Trek: Strange New Worlds and The Good Fight.
Walmart also discussed potential deals with Disney and Comcast, which owns Peacock, and Fishman speculated that Walmart might have preferred offering Disney’s services due to the companies’ long-standing relationship. He guessed that the two couldn’t come to terms and Paramount is likely the best Walmart could reel in. Paramount+ has 43 million subscribers—a fraction of Disney+’s 150 million but more than Peacock and ESPN+—and the streaming service could use the boost. Teaming with Walmart expands its consumer base and distribution.
Like Walmart, Paramount+ serves a large audience, a Walmart representative told the Observer. Walmart is building its benefits package to serve its consumers, not to compete with anyone else, they said.
Since the benefit began last week, Paramount+’s most consumed titles from Walmart+ subscribers include 1883, a Western drama series from the creator of Yellowstone; SpongeBob SquarePants, a children’s animated series; Ink Master, a reality series; Orphan: First Kill, a horror movie; and The Lost City, a romance-adventure movie.
Paramount+ isn’t the only benefit Walmart has added to its subscription service. Like Amazon Prime, Walmart+ offers unlimited free shipping and same-day delivery. Unlike Prime, customers can even pay to have their groceries put away for them. It also includes savings on fuel and six months of Spotify Premium, a $59 value. Subscribers and non-subscribers alike can use Walmart’s pickup service, where customers place an order online and pick it up curbside.
But even as Walmart makes inroads with its digital efforts, Amazon is extending its lead. The company now offers NFL games on Thursday nights exclusively on Prime, the sort of wildly popular, mass-market content that could help cement Prime in even the most loyal Walmart households.