Walmart’s Doubling Down on AVOD Helps Double Studio Profits

MARINA DEL REY, Calif.— With Walmart’s Vudu platform making ad-supported streaming a priority, Lionsgate says its AVOD revenue has doubled in one year.

While Walmart announced plans two months ago to boost its two-year-old ad-supported video on demand (AVOD) platform, Vudu Movies on Us, with original shows and movies, the chain’s studio partners are already reporting an uptick in business.

Speaking at the Parks Associates’ Future of Video conference, Thomas Hughes, executive VP of worldwide TV & digital distribution for Lionsgate, said that his studio has seen a doubling of AVOD revenue in just the last year. Hughes wouldn’t disclose specific numbers. But Walmart has been the biggest home entertainment sell-through distribution partner for Lionsgate and other studios dating back to the DVD era.

Related: Walmart Partnering with MGM to Boost Vudu with Originals: Report

In recent years, Walmart has built up its Vudu platform as a key online store to rent and buy movies and TV shows digitally. The retail giant is now building the somewhat recently launched AVOD component of Vudu, called Movies on Us, recently partnering with MGM to develop a episodic series based on the 1980s movie Mr. Mom.

So why is Walmart leaning into AVOD?

“Most households don’t have Netflix,” explained Julian Franco, head of AVOD for Vudu, noting that the SVOD giant’s 117 million U.S. subscribers don’t account for even half of American households.

According to Franco, Walmart’s “Watch for Falling Prices” ethos, which inspires cost-conscious Middle American consumers to seek prosperity through lower-priced purchasing, has reached the streaming age. Consumers, he told the Future of Media audience, are simply bombarded with too many subscription streaming services.

“We have 150 million people coming into our stores. And they’ve told us they’ll watch ads in order to save money on video.”

Specifically, Walmart conducted a survey of its customers in coordination with NPD Group several years ago. The findings, that consumers will accept a certain amount of advertising to once again watch video without a subscription cost, seem to conflict with recent conventional wisdom — that TV watchers are done with commercials.

Franco said Movies on Us ads are strategically placed, and do not saturate the programming in the same way commercials do on linear TV.

Launched in 2016, Movies on Us currently offers around 3,125 older movie titles. It also has 262 full seasons of TV shows.

In October, research company eMarketer published a report estimating that U.S. ad spending on digital video will grow about 30% this year to $27.82 billion.

Daniel Frankel

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!