Dive Brief:

• Fandango, the movie-ticketing and video-rental business owned by Comcast's NBCUniversal, agreed to buy on-demand video service Vudu from Walmart for an undisclosed sum, per an announcement. Vudu offers more than 10,000 movies and TV shows for free on an ad-supported service, along with 150,000 titles to rent or buy. 
• Vudu is available on more than 100 million devices in the U.S., according to Variety. Walmart acquired Vudu in 2010 for more than $100 million as the DVD market started to decline and amid a shift toward streaming and over-the-top services.
• Meanwhile, Fox announced it completed the acquisition of Tubi, an ad-supported video streaming service that started in 2014. The $440 million all-cash deal was announced last month as Fox sought to expand its on-demand video offering, Variety reported.

Dive Insight:

Fandango's acquisition of Vudu could give marketers more opportunities to reach U.S. consumers as parent company NBCUniversal expands its range of ad-supported streaming platforms, including through its recently launched Peacock service.

Vudu is expected to complement Peacock, which last week started to roll out among Comcast's cable and internet customers, along with FandangoNow, the digital marketplace for video rentals and purchases that doesn't have an ad-supported offering. The acquisition of Vudu can help NBCUniversal to scale up more quickly in the streaming media marketplace and sell a broader range of advertising packages. The deal also comes as streaming video consumption surges among consumers sheltered in place due to the coronavirus.

For Walmart, the sale of Vudu follows reports that the video streaming platform was seen as a non-core business in an increasingly crowded field. With major media companies expanding their streaming platforms, the cost to license content and stand out among rivals is likely to grow, and Walmart has shifted focus to more critical areas such as e-commerce, where it competes fiercely with Amazon.

Companies like Disney and AT&T's WarnerMedia are rolling out ad-free services to take on the streaming market leader Netflix, but the ad-supported sector is also gaining traction in a promising sign for brands. Fox this week completed its purchase of Tubi, following ViacomCBS's acquisition of PlutoTV and Comcast's planned takeover of Xumo earlier this year, The Wall Street Journal reported.

Fandango's acquisition of Vudu comes as media companies offer more lower-cost or free streaming services, especially as consumers show signs of "subscription fatigue." Almost half (47%) of U.S. consumers said the growing number of subscriptions and services required to watch what they want was frustrating, a 2019 Deloitte study found. Meanwhile, about three fourths (76%) of consumers are willing to watch ads on streaming networks in order to see content for free, per a survey by Integral Ad Science. That consumer sentiment creates opportunities for ad-supported services like Vudu and their sponsors to connect with viewers.

The streaming media market is expanding as millions of U.S. consumers cancel cable and satellite subscriptions and opt to link their TVs directly to the internet, leading to a steady rise in connected TV advertising. Despite signs of subscription fatigue, U.S. consumers are expected to boost their spending on video streaming, including ad-free and ad-supported services, by 29% to $24.1 billion this year from 2019, the Consumer Technology Association found.