Extra! Walmart signs with Paramount

One day after Sunday's issue examined rumors around Walmart adding a streaming service to Walmart+, the rumors stopped being just rumors.

Sunday’s issue of The Dispatch examined what were then only rumors that Walmart would add a streaming service subscription to its Walmart+ service (a rival to Amazon Prime). The top contender was Paramount+. I argued that Walmart's overall strategic interests would be better served by acquiring Paramount Global outright, rather than merely making the streaming service a perk for Walmart+.

The next day, Monday afternoon, Walmart announced that it had indeed reached a deal with Paramount to add Paramount+ to Walmart+. Here's a snippet from the Wall Street Journal's coverage:

The companies agreed to a 12-month exclusivity agreement and a two-year deal that would give Walmart+ members access to Paramount’s ad-supported streaming service, according to people familiar with the deal. The perk will be available starting in September, Walmart said.

Variety's coverage has some additional detail:

The Paramount+ Essential plan, which includes ads, will be available for no extra cost to Walmart+ members. In the U.S., Paramount+ Essential is regularly $4.99/month. The Essential plan does not include local live CBS stations (available only in Paramount+ Premium, $9.99/month), but it does provide NFL and UEFA Champions League games available via separate live feeds.

And Tech Crunch has a good history of the negotiations and Walmart's overall strategy for Walmart+.

Has anything changed in my analysis based on this news? No.

I still think that this is a half measure on Walmart's part. I still think that it sets up a homework assignment for the subscriber rather than a no-brainer automatic renewal.

We are living in an age where a huge part of the entertainment business is becoming a feature of other, larger businesses. Apple launched Apple TV+. Amazon launched Prime Video and Freevee and acquired MGM. Comcast acquired Universal and DreamWorks Animation. Sony long ago acquired Columbia and TriStar. The failure in this transformation was AT&T's acquisition of Time Warner, which is then rolled into Discovery when it couldn't digest the studio... rather like what happened with AOL's acquisition of Time Warner a while back. Disney remains independent, which it can do as the largest studio.

With a total acquisition of Paramount, Walmart could play a big role in the future of entertainment companies as features of larger businesses as well as the future of larger businesses as data businesses. Walmart has already invested money and effort in its retail media arm, Walmart Connect. As I argued earlier, the data from Paramount would have amplified the value of Walmart Connect.

Will Walmart use this new relationship with Paramount to test the waters about an acquisition down the line? Time will tell.

Thanks for reading this extra edition. See you next week.