Walmart's Vudu entertainment service to launch shoppable ads

Dive Brief:

Walmart-owned on-demand entertainment service Vudu has partnered with MGM to "create family-friendly content based on their iconic characters and IP, and we will premiere it exclusively for our Vudu platform," a Walmart spokesperson told Retail Dive in an email, in which he also confirmed a story from Variety. "This content will be available to our customers through our free, ad-supported video on demand service (AVOD) within Vudu."
That story noted that the original content will be available beginning in the first quarter of next year on Vudu's free, ad-supported Movies On Us service. Vudu also plans to feature shoppable video ads in the fourth quarter, according to Variety. More details will emerge at the Interactive Advertising Bureau's inaugural NewFronts West event Oct. 9-10, Variety also reported.
But, contrary to an earlier report this summer, a streaming service like Netflix or Amazon Prime Video isn't in the works, the spokesperson said. "We are not planning a subscription-based service at this time," he said. Netflix and Amazon both create original content, but Vudu's plans won't be as extensive as those services, Variety reported.

Dive Insight:

While Walmart's Vudu might appear to be moving to help the retail giant compete with Amazon, whose streaming entertainment service is a major perk for its Prime members, the plans appear to be more of a way to stoke Walmart's advertising.

That, too is emerging as a significant revenue stream for Amazon. Revenue from its "other" services in the second quarter, which the e-retailer said "Primarily includes sales of advertising services, as well as sales related to our other service offerings," rose 132% year over year to $2.2 billion. Amazon CFO Brian Olsavsky deemed the period "a strong quarter" in which "advertising also had strong growth."

Amazon is poised for a big future in advertising, according to Forrester, which expects marketers to increasingly turn to the Amazon Advertising Platform, where 44% of ad buyers are already found.

Walmart has actually moved away from the kind of membership model that Amazon has in Prime. The retail giant over a year ago scrapped its "Shipping Pass" membership and President and CEO of Walmart eCommerce U.S., Marc Lore, since then has been touting the fact that there's no need to pay for membership in order to get two-day shipping.

At least for its brick-and-mortar operations, Walmart doesn't really need it. Although Amazon enjoys a sticky base thanks to its Prime membership, which stands at over 100 million worldwide, Walmart sells to many more people. In 2018, 64% of U.S. adults (about 162 million) said they shopped at Walmart in the past three months, according to a report from market research firm Packaged Facts. Walmart itself says that 90% of Americans live within 10 miles of a Walmart store, Packaged Facts noted.