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8 August 2019

Walmart wages war in India with free OTT video launch

Amazon has been spending big in India to cement its dominance both in online retail and OTT video consumption. Now the ecommerce and cloud computing colossus has to face Walmart in both markets, as the world’s largest retail firm resorted to some dirty tactics this week with plans to roll out a free video streaming service for the Indian market. But as these two titans of the shopping world turn up the heat, will market frontrunner Hotstar feel the pressure?

A few weeks back, reports claimed Walmart had identified an opportunity in the central states of the US where Netflix and Amazon Prime Video are apparently less popular than on the East and West coasts. Could it have established a similar strategy for India and other fiercely competitive markets – or is Walmart merely playing mind games?

Walmart intends to enter the market through Flipkart, the local Indian ecommerce company it acquired in 2018 for $16 billion, targeting subscribers of the Flipkart Plus loyalty initiative, costing about $1.80 a month. Shoppers earn Flipkart tokens which can be exchanged for various rewards ranging from streaming music to flight tickets – a distinctly different approach to Amazon.

Whether or not throwing a free OTT video service into the mix will prove a worthwhile strategy is difficult to project, particularly in a diverse market like India. But considering that Flipkart has a formidable share of the Indian e-commerce market, estimated to be 44%, it already reaches hundreds of millions of eyeballs – the majority on mobile.

Flipkart is no small-fry itself, bringing in annual revenue in the region of $3 billion, but despite no shortage of cash from its parent company, there are no initial plans to produce original content. That could be a mistake given Amazon Prime Video’s investments in Bollywood originals to complement locally licensed programming. Disney and local Indian studios, including Balaji Telefilms, are among the original content licensing partners for the Walmart streaming launch, according to sources speaking to Bloomberg.

Walmart is not revered for its technology prowess, so while the launch of streaming services from non-traditional technology outfits like Disney have been perpetually questioned, the credibility of Walmart to brush shoulders with the established players is arguably even more in doubt. It does, however, own the SVoD service Vudu, best known for using hybrid peer-to-peer CDN technology, so it’s probable the new Indian service will rely on P2P technology.

As we mentioned, Hotstar, now owned ultimately by Disney after its takeover of 21st Century Fox, leads the pack with about 200 million active users on the free tier and around 8 million on the paid premium tier, according to data from our research arm Rethink TV. Amazon Prime Video is close to 4 million subscribers, while Netflix is flagging well behind with 100,000 subs. However, this was before Netflix finally – and inevitably – halved its price point to about $7 a month. You could argue that even this is too high in a market where a cable and DTH TV packages can cost as little as $3 a month, while primary content rival Prime Video is priced at just $1.90 a month. Which is precisely why Netflix has just launched a mobile plan in India priced at just $2.88 a month – a case of too little, too late?

Back home in the US, it was reported about three weeks ago that Walmart was brainstorming ideas for an $8 a month SVoD service in conjunction with a free, ad-supported offering, according to an anonymous source speaking toThe Information. Perhaps coincidently, Walmart also recently signed a five-year deal with Microsoft for Azure cloud services.