Walmart May Be The Last Man Into The Streaming Business

By Douglas A. McIntyre Updated Jan 11, 8:14PM EST · Published Jul 29, 7:00AM EDT

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Walmart May Be The Last Man Into The Streaming Business — © MikeMozartJeepersMedia / Wikimedia Commons

The Wall Street Journal reports that Walmart Inc (NYSE: WMT) has begun work on a streaming media service. It is so late to the industry that it is taking a large gamble which is not likely to pay off.

24/7 Wall St’s had a look at Walmart’s possible plans last week:

Several media outlets tried to get Walmart Inc. (NYSE: WMT) management to confirm that the company will go into the streaming media business. Presumably, the move would be to better compete with arch-rival Amazon.com Inc. (NASDAQ: AMZN). The rumor is almost certainly a rumor. Walmart executives know better than to walk into a buzz saw.

The first report about Walmart’s possible plans was posted by The Information, which reported that Walmart is “considering launching a subscription streaming video service….”

Netflix Inc. (NASDAQ: NFLX) has 57 million subscribers in the United States. Amazon may not have as many, but between them, the number has to be close to 100 million. Walmart would start from scratch. If the market is not already saturated, it must be close. Netflix added less than a million U.S. subscribers last quarter, and its management knows the business better than any other company in the world.

Walmart would have to go through the almost impossible process of cutting deals with television networks, cable networks, and movie studios. Its management would then need to decide if it wants to spend hundreds of millions of dollars on its own programming. Amazon and Netflix believe original programs are essential to the addition of and loyalty of subscribers. Each of the two companies has been in the process for over a decade.

Walmart also would face the challenge of how to launch and promote its own service. It might use Walmart.com, but the site is appropriately jammed with products Walmart needs to sell if it wants to be successful online. It could begin an entirely independent market effort, but the costs of that would be staggering.

Walmart has many challenges as it competes with Amazon, from e-commerce to logistics to Amazon’s popular consumer electronics. It is not going to add to those problems by chasing a business in which it cannot be successful.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.