Walmart Ties Up with MGM to Boost Vudu

On Monday, Walmart Inc said that it would partner with US movie studio Metro Goldwyn Mayer to create content for its video-on-demand service, Vudu, which the retailer bought eight years ago.

Walmart has been aiming to prop up Vudu’s monthly viewership that remains well below that of competitors like Netflix Inc. and Hulu LLC, which is controlled by Walt Disney Co, Comcast Corp, and Twenty-First Century Fox.

Media outlets had reported the Bentonville, Arkansas-based company was aiming to launch a subscription streaming video service to rival that of Netflix and take a shot at producing videos to attract more customers.

Walmart is not planning such a move, according to the sources. The retailer continues, on the other hand, to search for options that can boost its video-on-demand business and offer programs that target customers who live outside the big cities.

Walmart and MGM will make the announcement at the NewFronts conference in Los Angeles on Wednesday. It will include the name of the first production under the partnership, which Walmart will license from MGM.

“Under this partnership, MGM will create exclusive content based on their extensive library of iconic IP (intellectual property), and that content will premiere exclusively on the Vudu platform,” said Walmart spokesman Justin Rushing.

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

The financial figures of the deal were not disclosed.

Licensing content is a cost-effective strategy at a time  when producing original content has become an expensive venture. As of July, Netflix said  that it was spending $8 billion per year on original and acquired content.

Amazon.com Inc’s programming budget for Prime Video was more than $4 billion, while US broadcaster HBO, which is owned by AT&T Inc, said it would spend $2.7 billion this year.

Walmart acquired Vudu in 2010 to safeguard against declining in-store sales of DVDs. Walmart bet that customers would continue to buy and rent movies and move their titles to a digital library, which Vudu would create and maintain for viewers.

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

At present, there are more than 200 video services that bypass cable providers and stream content directly to a TV, laptop, phone, or game console. That is higher from 68, which was recorded five years ago, according to Parks Associates, a market researcher.

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