Netflix's Latest Competitor: Wal-Mart?
Let's compile a list of Netflix's (NAS: NFLX) competitors.
The closest competitor is probably Hulu, which is trying to find a new home. Hulu's streaming-subscription model is even at the same price point of just about $8 per month. Coinstar (NAS: CSTR) has been overpromising and underdelivering on its video-streaming ambitions. Then you have Amazon.com (NAS: AMZN) bundling more and more videos into its Amazon Prime service. We can't leave out Apple's (NAS: AAPL) iTunes Video store and Apple TV, either.
Who is the latest contender to step into the ring? None other than retail titan Wal-Mart (NYS: WMT) . Some of you may remember when Wal-Mart purchased digital-movie streamer Vudu early last year. Well, it looks as though the company has decided to make its move. Ever heard of Vudu? Me neither. Which probably helps explain the move.
Reuters reports that Wal-Mart is now integrating Vudu's streaming service directly into its heavily trafficked website, hoping to attract passersby. Vudu's service differs from Netflix in the sense that it's not subscription-based. Vudu offers video on demand a la carte, similar to Apple's offering.
Can Vudu make a difference? I doubt it. First of all, Vudu has no differentiating competitive advantage over the gaggle of competitors I mentioned. Potential viewers have no compelling reason to switch and stay switched. Vudu will tell you that it can offer more movies in HD sooner than Netflix can, but that seems pretty superficial to me. Netflix was never about new hit movies, but rather the breadth of its back catalog.
It's also unlikely that Vudu can make a difference in Wal-Mart's results. Last year, Wal-Mart's total revenue was $421 billion -- with a "B." The company will need to serve up an awful lot of video for anyone to notice.
Wal-Mart can try to get into the intensely competitive online video-streaming game, but it will probably be the only one that cares.
At the time this article was published Fool contributorEvan Niuhas cut the cable cord by subscribing to Netflix and Hulu. He owns shares of Amazon.com and Apple. The Motley Fool owns shares of Apple and Wal-Mart Stores.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com, Apple, Netflix, and Wal-Mart Stores, creating a bull call spread position in Apple, creating a diagonal call position in Wal-Mart Stores, and buying puts in Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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