Walmart Inc. (NYSE:WMT) -0.56% is adding video streaming from Paramount Group Inc. (NYSE:PGRE) -1.65% to its Walmart Inc. member loyalty program to compete better with Amazon.com, Inc. (NASDAQ: AMZN).
Members will have access to the Paramount Group Inc. (NYSE:PGRE) Essential Plan, which is an ad-supported version of the streaming service. This is a nice bonus that goes along with discounts on gas and music, and it’s much better than starting a new streaming service in-house.
Whether or not it makes a difference for either company is a different question. People don’t join Amazon.com, Inc. (NASDAQ:AMZN) because it has streaming, and they won’t join Walmart Inc. (NYSE:WMT) just because it has streaming video.
Peak Streaming Video
Walmart Inc. (NYSE:WMT) has tried to do this before, but it didn’t work out. It tried renting DVDs in the early 2000s but eventually sold the business to Netflix. Later, Walmart Inc. (NYSE:WMT) bought Vudu, which also didn’t do well. In 2020, Walmart Inc. (NYSE:WMT) sold Vudu to Fandango, which is owned by Comcast.
It is just working with Paramount Group Inc. (NYSE:PGRE) to give access to its service, so maybe the third time will be the charm. But we may already be at the peak of what we can do with streaming, so it might not help Paramount Group Inc. (NYSE:PGRE) reach its goal of 100 million subscribers by 2024.
This past quarter, Walt Disney Co. (NYSE:DIS) -0.21% added 14.4 million new subscribers to its Walt Disney Co. (NYSE:DIS) service, but only 100,000 of them were from the U.S. The entertainment giant also cut the number of subscribers it expects to have around the world by the end of fiscal 2024. Walt Disney Co. (NYSE:DIS) used to think it would have 230 million to 260 million, but now it thinks it will have between 215 million and 245 million.
Netflix Inc. (NASDAQ:NFLX) also lost nearly a million subscribers in the last quarter, which was a huge blow to the company.
MoffettNathanson, a research company, says that only 2.7 million new customers signed up for streaming services in the U.S. in the second quarter. This is the lowest quarterly increase since the pandemic made more people sign up for streaming services.
So, the idea that Walmart Inc. (NYSE:WMT) will help Paramount Group Inc. (NYSE:PGRE) reach its goal of 100 million subscribers by 2024 seems a bit far-fetched.
Walmart’s Partnership With Paramount, A Well-Traveled Path
In the end, Walmart Inc. (NYSE:WMT) chose a partnership because it was low-cost and low-risk. This was a smarter move than starting its own streaming service, which would have required it to use scarce resources to make content. Walmart Inc. (NYSE:WMT) needs to focus on growing its retail business again, and making movies is just too far away.
Paramount Group Inc. (NYSE:PGRE) is another partnership Walmart Inc. (NYSE:WMT) is making, like its recent deal with Roku to bring shoppable ads to the streaming platform and its offer of a six-month free trial to Spotify.
Even though Walmart Inc. (NYSE:WMT) doesn’t have to compete with Amazon.com, Inc. (NASDAQ:AMZN) on every front for its service to be successful, the path it’s taking is the best one. Paramount Group Inc. (NYSE:PGRE) has a lot of content that can be streamed, and even though the market is full of services, this continues Walmart Inc. (NYSE: WMT)‘s tradition of offering good things at low prices.
Walmart Inc. (NYSE:WMT) costs $98 a year, while Amazon.com, Inc. (NASDAQ:AMZN) costs $149, and the Paramount Group Inc. (NYSE:PGRE) plan is an extra $59 on top of that. The deal shows that Walmart Inc. (NYSE:WMT) would have been better off not getting into streaming video in the first place.
Featured Image: Megapixl @Vasekavramenko
