Walmart's Vudu plans big int'l expansion
Streaming service to compete with Netflix, local players — Walmart-owned streaming video service Vudu has plans for an aggressive international expansion, according to sources, which could spell trouble for Netflix and other competitors.
Context & Ripple Effects
Variety's report is sourced rather than confirmed — Vudu's international push is 'according to sources,' so every claim below hangs on an unconfirmed plan. Still, the story travelled unusually wide for a rumor, with pickups from Fox Business and The Next Web the same week, which itself signals how much attention any Walmart move into Netflix's territory commands in April 2012.
The arc matters too: Walmart has already shown it will curate Vudu aggressively, shutting down the service's adult-content section back in 2010, consistent with a retailer protecting a family-facing brand. Meanwhile Netflix enters this fight distracted by its own engineering agenda — publishing a two-part exploration of its recommendation engine, preparing to open-source its Simian Army cloud-testing tools, and with CEO Reed Hastings publicly attacking Comcast over net neutrality and data caps.
First-order effects
- Netflix would face a rival backed by Walmart's balance sheet in markets where it currently competes mainly with smaller local services — the report explicitly frames Vudu as a threat to 'local players' as much as to Netflix.
- For the unconfirmed plan to execute at all, Vudu must clear the hardest step in streaming: negotiating content-licensing deals territory by territory, which its domestic download-to-own model does not automatically carry abroad.
Second-order effects
- Local streaming incumbents in any target country would be forced to respond on pricing or exclusive content against a competitor whose parent can subsidize losses far longer than they can.
- Rights holders gain a new bidder wherever Vudu enters, tightening competition for streaming licenses and pushing up what Netflix and local players alike pay for catalog.
Third-order effects
- If the pattern holds, the streaming market fragments along retailer lines: general merchandisers treating video as an attach business for their core commerce, competing against pure-play subscription services built around recommendations and originals.
- A credible Walmart entry also raises the odds regulators and carriers treat streaming bandwidth and data caps as a contested policy issue — the fight Hastings picked with Comcast days before this report — since more deep-pocketed entrants mean more lobbying weight on both sides.
The trend: Big-box retailers are moving from domestic digital storefronts into global streaming distribution, forcing pure-play services like Netflix to defend territories they once entered uncontested.