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Will Walmart's Vudu Heat up the Streaming Game?

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Walmart, Inc (WMT - Free Report) recently said that it would partner with movie studio Metro Goldwyn Mayer (MGM) to create content for Vudu, its video-on-demand service. The shows will be exclusively licensed to Vudu for North America and available on Vudu’s free, ad-supported Movies On Us service.

Walmart’s announcement is in a move to boost Vudu’s monthly viewership, which is far below rivals Netflix Inc (NFLX - Free Report) and Hulu, owned by Comcast Corporation (CMCSA - Free Report) , The Walt Disney Company (DIS) and Twenty-First Century Fox, Inc. (FOXA - Free Report) .

Understandably, this will intensify competition for the likes of Netflix, Hulu and Amazon.com, Inc’s (AMZN - Free Report) Amazon Prime, which have so far been dominating the space. Moreover, the holiday season too is nearing and online streaming giants are gearing up with new shows.

Walmart Intensifies Streaming War

Reportedly, the two will make a formal the announcement on Oct 9 at Los Angeles, wherein it will reveal the name of the first production under the partnership that Walmart will license from MGM. The studio will create original content exclusively for Vudu based on franchises from its extensive film and television catalogue.  The first show is slated to debut in the first quarter of 2019 on Movies On Us.

The retail giant has been trying to boost Vudu’s monthly membership, which is lagging the huge subscriber base of Netflix and Hulu. Understandably, licensing content from MGM is a smart move by Walmart given that producing original content is a costly affair. Walmart had bought Vudu back in 2010 in a move to counter its declining in-store DVD sales.

Vudu offers around 15,000 titles to buy or on rent, while Movies On Us, its ad-supported streaming service boasts 5,000 movies and television shows. However, despite that, Vudu hasn’t posed a significant threat to the likes of Netflix, Hulu and Amazon Prime. The recent move definitely will help Walmart perk up Vudu’s monthly membership and intensify competition.

Competition Escalates

Walmart’s announcement comes just ahead of the holiday season. Online streaming giants are readying with more original content, as online streaming traffic increases during the holiday season. Netflix is already readying to make a head start with a series of original Christmas movies. It goes without saying that the online streaming market is booming and an increasing number of players are trying to penetrate the zone.

Walmart too will be facing stiff competition from the existing players as well as a host of companies that are planning to launch their online streaming service. That said, competition is already taking a fierce shape. In July, Netflix had said that it would spend $8 billion on original content in 2018.

Amazon too has been spending aggressively on original content for its Amazon Prime subscribers. The e-commerce giant is estimated to have spent $4 billion on content last year, which is expected to increase this year, while HBO, owned by AT&T Inc. (T - Free Report) said that it plans to spend $2.7 billion on original content. Apple, Inc. (AAPL - Free Report) too is investing in original content and developing its own streaming service. Apple has a Zacks Rank #2 (Buy), while Walmart, Amazon, Netflix, Twenty-First Century Fox, AT&T and Comcast each carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Summing Up

The media streaming war is fast heating up with demand for original content growing steadily. Walmart’s video streaming plans are not only to boost Vudu’s monthly membership but also to capture the expanding online streaming market.

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