A look back at Walmart’s seemingly doomed 20-year quest to break into Hollywood

Walmart is ready to enter the streaming wars yet again. This time in partnership with Paramount.

The Wall Street Journal reported yesterday the retail giant has reached a deal with Paramount Global to offer its streamer, Paramount+, to subscribers of Walmart’s service Walmart+. The news comes after speculation that Walmart had been in talks with Disney, Comcast, and Paramount to beef up its membership program that currently offers same-day delivery, discounts on gas, and so forth.

Walmart launched Walmart+ in 2020 in a clear bid to stay competitive with Amazon Prime, which saw explosive growth during the pandemic as consumers doubled down on shopping from home. Now it seems Walmart also wants to replicate Amazon Prime’s success in streaming, though perhaps more as a hub that makes it easier for customers to access disparate services with a single sign-in and unified billing rather than spending billions on original movies and series.

However, Walmart has been down this road before prior to its deal with Paramount—and it’s been a slippery road, to be sure. The company’s attempts to gain a stronger foothold in entertainment have been a 20-year slog.

2002-2003: “Until Walmart hits 100,000, they won’t be a threat.”

Walmart, the top retailer of practically any product you can think of, saw a threat to its DVD sales from the Silicon Valley upstart Netflix. So Walmart began testing its own online DVD rental service in October 2002 and officially rolled out the service in June 2003. “A year and a half ago, we found out that Walmart.com doesn’t want to work with us, but work on us,” said then Netflix CEO Reed Hastings in a 2002 Wired feature.

To some analysts, Walmart looked to be in the more attractive position, the number-one company in the world in annual revenues, according to the Fortune 500. Netflix had been seeing sizable growth at the time—the company went public in May 2002—but was still just five years old. “I wouldn’t want to be Netflix, with a 500-pound gorilla chasing after it,” said Dennis McAlpine, an analyst at McAlpine Associates, in 2002.

But it was evident even back then that Netflix wasn’t worried, given its head start in the space. Lynn Brinton, a spokesperson for Netflix, said in 2003 she wasn’t sure how many subscribers Walmart had, but she was confident it was a mere fraction of Netflix’s 1 million. “Until Walmart hits 100,000, they won’t be a threat,” she said.

And, indeed, they weren’t.

2005: “Walmart did not get into this business with the same vim and vigor.”

After just two years, Walmart shuttered its DVD rental service. According to estimates at the time, Walmart had fewer than 200,000 subscribers, compared with Netflix’s 3 million and Blockbuster’s 750,000. “Selling movies has a great cross-channel integration with [Walmart], but the rental business was less so,” said then Walmart.com CEO John Fleming.

Funnily enough, the same analyst who said he wouldn’t want to be Netflix “with a 500-pound gorilla chasing after it,” told the Washington Post, “Walmart did not get into this business with the same vim and vigor.”

Walmart didn’t just bow out of the race; the retail giant actually struck a deal with Netflix in which it promised to encourage its customers to switch to Netflix, and in return Netflix would promote Walmart’s online movie store.

2007: Not performing “as expected.”

In February 2007, Walmart announced a beta version of a film-and-TV-download service with more than 3,000 titles from the top movie studios, including Disney, Sony, Universal, and Warner Brothers. “This marks a significant step for Walmart in home video, and enables us to better serve our customers as they begin to complement their DVD purchases with downloading of digital video content,” said Kevin Swint, Walmart’s then divisional merchandise manager for digital media.

This could’ve been a landmark deal between Hollywood and retail, except for the fact that Apple already beat Walmart to the punch a year prior by offering movie downloads through iTunes, a natural follow-up to the company’s dominance in music downloads. Walmart axed its download service after less than a year. The site was powered by Hewlett-Packard, and a spokesperson for the company told Reuters in 2007 that they discontinued the technology because video downloads weren’t performing “as expected.”

2010: A promise of “unprecedented access” to entertainment

Ever undeterred to have skin in the entertainment game beyond selling equipment and hard copies of DVDs, Walmart acquired video-on-demand service Vudu in February 2010. Walmart, the nation’s number-one seller of DVDs at the time, now had access to Vudu’s digital catalogue of 20,000 titles.

“Combining Vudu’s unique digital technology and service with Walmart’s retail expertise and scale will provide customers with unprecedented access to home entertainment options,” said Walmart’s then vice chairman Eduardo Castro-Wright.

2018-2019: “We are not going to be a studio.”

Vudu and Walmart decided to step into original content under a deal with MGM to create new series based on the studio’s franchises. The partnership was meant to ease the burden of keeping pace with the onslaught of original content from competitors. According to estimates, Netflix pumped out more than 240 original TV shows and films in 2018, spending $12 billion in the process. “We are not going to be a studio,” Scott Blanksteen, Vudu’s then VP of product and ad-supported VOD, told Variety in 2018. “We are not going to have 300 or 400 originals.”

Walmart’s more modest approach to original content became clearer at 2019’s NewFronts, the digital media world’s event to show advertisers upcoming video content, when it was announced it would bankroll at least 12 original series and specials on Vudu by the end of the year. Julian Franco, Vudu’s then senior director, also hinted at shoppable programming and other “interactive content” powered by Eko, an interactive media company Walmart acquired in 2018.

Around this time, Walmart was also said to be in talks to start its own streaming service separate from Vudu. In 2018, the Wall Street Journal reported that former Epix CEO Mark Greenberg was advising Walmart on the move. The retailer’s edge into the streaming wars would cater to middle America, a clear alignment with the company’s demographic, and evocative of that cultural moment when shows such as The Conners, ABC’s reboot of Roseanne, were seeing success in attracting an audience.

2020: “We will continue to invest in areas where we have the greatest strength . . .”

Whatever traction Walmart may have been establishing in the streaming wars started to slip in 2020 when rumors began to surface that the retailer was shopping its Vudu service. There were talks of selling Vudu to NBCUniversal, but in the end it went to Fandango. A Walmart spokesperson told The Street the sale was meant to prioritize Walmart’s core assets in retail.

“We will continue to invest in areas where we have the greatest strength and are in the best position to serve our customers today and in the future,” the spokesperson said. “Pickup and delivery are great examples of how we’ve invested to bring digital and physical capabilities together to better serve our customers, by offering more choice and convenience.”

So that brings us to the here and now of Walmart’s reentry into streaming hand-in-hand with Paramount. As troubled as Walmart’s past efforts have been in gaining a stronger foothold in entertainment, this may be the retailer’s best bet to date.

Amid the backdrop of Netflix losing subscribers, adding more utility to a subscription beyond a free trial may be what consumers are looking for. It’s already what Amazon has with Prime (expedited shipping, exclusive shopping events and discounts, and so forth) as well as Apple offering an option to bundle Apple TV+ with its other services, including Arcade and Music.

Since launching Walmart+ in 2020, the company hasn’t released subscriber numbers, but it’s been estimated that the company has attracted between 11 and 32 million members. If true, partnering with a streaming service could certainly prove to be mutually beneficial.

One could make a strong business case for middle America being an untapped market in Hollywood, leaving room for a modest slate of Walmart+ originals. The company definitely has the budget with fiscal 2022 revenue of $573 billion.

So, who knows? Maybe after failed attempts in DVD rentals and digital downloads, selling off a streaming service, and squashing plans of their own, the fifth time’s the charm for Walmart?

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