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Walmart Eyes Q4 Launch of Vudu-Branded Service to Rival Netflix (EXCLUSIVE)

Walmart is in fact looking at entering the subscription-video space to compete with Netflix, Amazon and Hulu, sources confirmed — and the retailing giant is planning to launch the service through its Vudu digital-entertainment division, Variety has learned.

Vudu has set plans to launch a low-cost subscription video-on-demand package in the fourth quarter of 2018, according to sources. The SVOD service would include both licensed TV shows and movies, as well as original productions.

Word that Walmart is quietly working on a subscription VOD service with a price target of $8 per month was first reported this week by The Information.

A Vudu rep declined to comment. “We don’t comment on rumors and speculation,” she wrote in an email.

The Q4 launch date for a Vudu-branded subscription-streaming service may be tentative, and it’s possible that Walmart will shift gears or scrap the strategy altogether. Sources said Walmart was seriously looking at moving into SVOD in early 2017 but then cooled on the idea.

For now, it’s unclear what content — licensed or original — would be in Vudu’s subscription-video lineup, or what the final pricing will be. Vudu, of course, has spent years dealing with major Hollywood studios and TV networks to license titles for rental and download-to-own. Sources confirmed that Walmart has reached to content companies about licensing deals.

Walmart acquired Vudu in 2010, but the transactional video site has not mounted a significant challenge to Apple’s iTunes, Amazon Video or Google Play, which dominate the segment. Vudu currently offers 150,00 titles to buy or rent, while its free, ad-supported streaming service, called Movies On Us, includes 5,000 movies and TV shows.

Vudu also has been integrated to some extent with its parent’s business, such as with InstaWatch, a feature that automatically grants customers access on Vudu to a digital copy of eligible DVDs or Blu-ray discs purchased at Walmart stores and on Walmart.com.

Walmart certainly has the financial resources to make some kind of run at SVOD. It had $7.9 billion in cash and equivalents at the end of the quarter ended April 30, 2018. Walmart reported $121.6 billion in sales for the period (up 4.4%) and net income of $2.1 billion (down 30%).

One former Walmart exec expressed surprise that the company was looking to Vudu to lead its charge into subscription VOD, expecting that Walmart would strike a partnership in this area instead of trying to build an SVOD platform from scratch. Vudu in the past has partnered with Ooyala, an online-video platform owned by Australia’s Telstra, for infrastructure services.

For Walmart, the big rival it’s looking to counter with the Vudu subscription product is Amazon, and Walmart has been making steady moves to up its game in e-commerce. A Vudu-branded SVOD service would be positioned as a more affordable and mainstream alternative to Amazon’s Prime Video, which is available as part of the $119 annual Prime membership program or $8.99 monthly as a standalone service.

Vudu largely has maintained distinct operations from its parent company on the digital side. Vudu is based in Sunnyvale, Calif., while the retailer’s Walmart.com and e-commerce teams are based in San Bruno (right next to YouTube’s campus).

Vudu is headed by EVP and general manager Jeremy Verba, the former CEO of eHarmony who joined the company in 2014.

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