Two Big Reasons Walmart’s Streaming Service Will Succeed

By Tripp Boyle, SVP, Connekt

Do traditional mass market retailers have any future in the video streaming space? Walmart seems poised to place a multi-billion dollar bet that the answer is yes, despite the dramatic flameout of competitor Target’s video service just three years ago. Nonetheless, if I were a bookie, I’d say there were good reasons for the smart money to go with Walmart.

The challenges Walmart faces in the streaming market are obvious and substantial, starting with formidable competition from services like Netflix, Hulu, and Amazon Prime—not to mention Disney’s looming venture. There’s no way the big-box retailer can go head-to-head against Netflix’s $8 billion budget for original content creation, of course, but the truth is, it doesn’t have to.

Walmart’s certainly got the resources to spend on par with the major TV networks to produce at least some original programming and to license plenty of other high-quality content, and that’s important. But what’s going to tip the scales in Walmart’s favor is the combination of its audience focus and its unique relationship with Smart TV OEMs (original equipment manufacturer). Those two factors provide the retail giant with a tremendous opportunity to integrate commerce directly into content, and a bespoke streaming service is the perfect vehicle to make it happen.

For Walmart, it’s always been about the audience. Walmart is a brand with a loyal core audience, and many of its target customers are not yet committed to a preferred streaming provider. Such an audience is predisposed to Walmart’s streaming service, and easy access to in-content commerce opportunities will likely be perceived as a valued add-on. A branded streaming service presents Walmart with an opportunity to tap into an incredibly loyal existing audience and capture an even greater share of wallet.

Perhaps most importantly, it is estimated that approximately half the Smart TV devices purchased by consumers in the U.S. are sold through Walmart outlets. The OEMs need Walmart in order to hit their sales numbers, and many are already building Walmart-specific models of their devices. That opens up a world of opportunities for Walmart to promote its streaming service and to position itself as a major player in the nascent t-commerce market. For example, Walmart could work with OEMs to have its offering featured as the preferred streaming service on Walmart-specific models. It might even be able to have its eCommerce payment system built into them.

Walmart’s dominant role in retail TV sales makes it easy to offer other types of incentives for consumers to sign up for its streaming service. It could offer the service free or at a subsidized price with the purchase of certain models. It could offer steep discounts on models that come with the service already activated. It could even tie the streaming service into other aspects of its business, such as by offering it free to customers who spend a certain amount of money on other Walmart products over the course of a year.

It will be easy for Walmart to justify such promotional expenses and to track ROI on them. Done right, a comprehensive program of this type would allow Walmart to own the user interface on millions of Smart TVs. Data input from a remote is a huge barrier to t-commerce, but owners of these sets would only have to set up their devices once. All their information would be saved, and opportunity to purchase becomes as simple as one click on the ad or in-content bug to add an item to the cart, one click to buy. The opportunities for Walmart to increase ARPU are staggering.

No doubt, the opportunities that exist here are just as attractive to other eCommerce retailers as they are to Walmart, but (with the obvious exception of Amazon) capitalizing on them through a branded video streaming service is simply out of reach. Eventually, other eCommerce players will be able to tap into the t-commerce market, perhaps by going through Walmart or Amazon, by partnering with TV OEMs, or by working directly with tech companies providing in-content commerce capabilities. For now, though, Walmart’s video streaming venture looks to stand alone among retailers in its prospects for success.

The Cynsiders column is a platform for industry leaders to reach out to colleagues, followers, and the public at large. In their own words and in targeted Q&As, columnists address breaking news, issues of the day, and the larger changes going on in the ever-evolving world of television, video and digital. Cynsiders columns live on Cynopsis’ main page and are promoted across all daily newsletters. We welcome readers’ comments, queries, and column ideas at Lynn@Cynopsis.com.

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