Walmart may launch a video streaming service

Netflix(NASDAQ: NFLX) is the 800 pound gorilla in the video streaming market. The company will spend somewhere around $13 billion on content this year. The cost of entry into this market is measured in the billions of dollars, and with Netflix burning mountains of cash each year, long-term profitability isn't a guarantee.

Walmart(NYSE: WMT), a company that has mostly kept its focus on its core retail business, may be looking to jump into the streaming market. The Information reported on July 17 that the megaretailer was considering launching a low-cost video streaming service that would compete with market leaders like Netflix and Amazon.com's (NASDAQ: AMZN) Prime Video. Details were scarce, but such a move would introduce even more competition in an increasingly crowded market. 

RELATED: Check out the biggest mishaps made by customers, according to Walmart employees: 

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5 biggest mistakes shoppers make, according to Walmart employees
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5 biggest mistakes shoppers make, according to Walmart employees

Making assumptions about the services offered at your local store

Walmart does offer product care plans and a trade-in program that allows shoppers to exchange devices for gift cards.

But one Walmart employee of nine years told Business Insider that it was a mistake for customers to just assume "we have an electronics repair facility here."

If you're in doubt, it's best to skip the wild goose chase and try calling ahead.

Failing to plan out your shopping trips

Shopping for a big holiday weekend blowout?

Well, just assume that everyone else is following suit.

An associate of 12 years told Business Insider that it was a mistake to wait "until the last minute to shop," especially when it comes to busier times of the week or year.

The employee added that some shoppers fail to understand that "they aren't the only people that will show up. So, yes, there will be lines at the registers. Plan better — plan early."

A Reddit poster who said they worked in the electronics department at Walmart noted that Friday nights, Saturdays, and Sundays typically garner the biggest crowds.

Skipping an important return hack

A Walmart store manager told the savings-oriented blog The Krazy Coupon Lady that there's a way to return products ordered online with less hassle.

If you end up ordering an item on Walmart.com that you don't actually want, you can return it through the chain's mobile express returns system.

"You just get a QR code from your Walmart app, bring your item to the store, skip the line, and scan your QR code on the credit card machine," according to The Krazy Coupon Lady.

Being mean to Walmart associates

A Walmart employee of 15 years said that "being mean" to the employees at Walmart is probably the biggest mistake a shopper can make.

"If you are nice to them, they will bend over backwards to help you," the employee told Business Insider.

That means acting courteously and not threatening to "contact management or the home office" when something goes wrong that's outside of the employees' control, according to an associate of 11 years.

"Unfortunately, there is a bad stigma surrounding Walmart employees," former Walmart employee Crystal Linn wrote on Quora.

They added that customers sometimes buy into that bias and treat the associates as "ignorant high school drop-outs."

"I even had a woman ask me once, 'Do you even know what an electric can opener is?' after I showed her where the handheld ones were located," Linn wrote. "Not everyone is like this, of course, but it seems that the large majority have this idea in their mind that anyone that works at Walmart is trashy. The way that people treat you because of that really wears you down."

Forgetting to check for markdowns

Want to save some money on your next Walmart run? Watch out for the prices.

Specifically, keep an eye out for price tags ending in 0 or 1.

According to an interview with a Walmart store manager on The Krazy Coupon Lady, a pricetag ending with a 0 or a 1 denotes a "final markdown price." Meanwhile, the store manager told the blog that prices ending in 5 "are the first markdown price."

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Walmart's plan

Walmart is aiming to offer a video streaming service priced below $8 per month, according to people familiar with the situation. That would undercut Amazon Prime Video and HBO Now, and match or beat Hulu and Netflix's basic plan. The company is also considering a free ad-supported service.

Service

Monthly price

Netflix basic (no HD, 1 screen at a time)

$7.99

Netflix standard

$10.99

Amazon Prime Video

$8.99

Hulu with ads

$7.99

HBO Now

$14.99

Potential Walmart streaming service

Less than $8

Data source: Netflix, Amazon, Hulu, HBO, and The Information.

Walmart is reportedly interested in going after customers in the Middle America. One of The Information's sources said that Netflix and Amazon are seen by the company as more popular on the coasts. That might create an opening for Walmart to offer a differentiated service aimed at demographic groups underserved by existing options.

It's unclear how committed Walmart is to launching a video streaming service. One of The Information's sources said that the company may ultimately scrap the idea. This wouldn't be Walmart's first foray into video -- the company acquired video-on-demand service Vudu in 2010. But the model of selling shows and movies individually doesn't make much sense in a world full of cheap subscription services.

An expensive endeavor

If Walmart does go through with this plan, it would likely take billions of dollars of content spending annually to put out a product comparable with existing services. HBO spends somewhere around $2 billion annually on content, far less than Netflix, so Walmart certainly doesn't need to match the streaming giant dollar for dollar. But offering a full-scale streaming service won't be cheap.

Walmart would have no problem funding content spending from its cash flow. The company generated more than $18 billion in free cash flow in the latest fiscal year. After dividend payments, about $12 billion is left over.

But such a service would almost certainly knock down profits, potentially for years. The company is already sacrificing the bottom line to expand its e-commerce business, and investors may not be too keen to see another profit-sucking initiative take root.

But the cost may be worth it to open up another front in the war against Amazon. Walmart has ramped up its e-commerce efforts in the past few years, with the acquisition of Jet.com, free two-day shipping, and a free online grocery pick up service. That hasn't slowed down Amazon, but it has turbocharged Walmart's online growth. Entering the video streaming market with a cheap option could help convince those who have resisted signing up for Amazon Prime to stay the course.

At this point, Walmart's potential streaming service is just a rumor. But I wouldn't be all that surprised if the retailer decided to pull the trigger.

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