Walmart partners MGM to create TV content

NEW YORK • Welcome to Walmart TV.

The world's biggest retailer has partnered movie studio Metro-Goldwyn-Mayer (MGM) to create original programmes that will air exclusively on Walmart's Vudu video-streaming service.

The shows, based on franchises from MGM's film and television catalogue, will be free to watch and financed with advertising.

An ad-free version will be available for paying viewers. The first show will debut in the first quarter of next year, company spokesman Justin Rushing confirmed earlier this week.

For Walmart, the move is less ambitious - and less risky - than creating its own subscription-based video service, which would pit it directly against Netflix, Amazon.com and Hulu.

Media outlets have reported that Bentonville, Arkansas-based Walmart was looking to launch a subscription streaming video service to rival Netflix and make a foray into producing TV shows to attract customers.

But company sources have told Reuters that Walmart is not planning such a move and the company does not intend to spend billions of dollars on producing or acquiring exclusive content as of now.

The retailer continues, however, to look at options to boost its video-on-demand business and offer programmes that target customers who live outside of big cities.

"Under this partnership, MGM will create exclusive content based on its extensive library of iconic IP (intellectual property) and that content will premiere exclusively on the Vudu platform," Mr Rushing told Reuters.

The focus will be on family-friendly content that Walmart customers prefer, he said.

These shows will be exclusively licensed for a period of time to Vudu for North America and available on Vudu's free, ad-supported service Movies On Us.

Vudu will also commission and license original shows from other sources.

The financial terms of the deal were not disclosed.

Licensing content is a cost-effective strategy at a time when producing original content has become costly.

As of July, Netflix said it was spending US$8 billion (S$11 billion) a year on original and acquired content.

Amazon.com's programming budget for Prime Video was more than US$4 billion, while American broadcaster HBO, owned by AT&T, said it will spend US$2.7 billion this year.

Walmart also plans to roll out a new video ad format for Movies On Us, which will allow viewers to make purchases from Walmart.com.

Walmart acquired Vudu in 2010 to safeguard against declining in-store sales of DVDs.

Walmart bet customers would continue to buy and rent movies and move their titles to a digital library, which Vudu would create and maintain for viewers.

But the video site has not posed a significant challenge to rivals that dominate the segment, even though it is preloaded or can be downloaded to millions of smart televisions and video-game consoles.

Vudu offers 150,000 titles to buy or rent, while Movies On Us, its free, ad-supported streaming service, includes 5,000 movies and TV shows.

There are currently more than 200 video services that bypass cable providers and stream content directly to a TV, laptop, phone or game console.

That is up from 68 services five years ago, according to market researcher Parks Associates.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on October 11, 2018, with the headline 'Walmart partners MGM to create TV content'. Print Edition | Subscribe