Dive Brief:

• Walmart is mulling a sale of its on-demand video service Vudu, The Information reported. The retailing giant acquired the digital storefront for renting or buying movies and TV shows in 2010.
• It's unclear if an actual deal is currently in the works or how far along any potential discussions are, only that Walmart is considering the option of a sale. The Information reported that Walmart believes it would need to invest heavily in Vudu to keep up with a growing list of streaming options that includes Amazon and Netflix, and that the platform "isn't core to its business," according to Cnet.
• In a statement to The Information, a Walmart spokesperson said that the company is "constantly" having discussions about new opportunities for growth, but never shares the specifics of those discussions publicly. Vudu has been installed on more than 100 million devices in the U.S., the spokesperson said.

Dive Insight:

A potential sale of Vudu would show Walmart pulling back on yet another aspect of its digital business at a time when rivals are ramping up their efforts in the space. It would also remove what has, to date, been a large part of the retailer's pitch for establishing a more robust media network that advertisers can buy into.

In May, Walmart presented Vudu for the first time at the Digital Content NewFronts, a flashy forum akin to the TV upfronts where publishers pitch brands and agencies on spending more money on their services. At the show, Walmart touted its attempts to layer innovative advertising formats, like shoppable in-stream ads, into Vudu's content slate, which is expanding to include original programming in a manner similar to the model of companies like Netflix and Amazon Prime Video.

"Walmart's data and scale make us the sleeping giant of the entertainment space," Jeremy Verba, VP and GM of Vudu, said at the show.

Purchasing Vudu was initially a savvy play for Walmart to link its ability to drive DVD sales with the digital sphere. Interest in physical media has declined rapidly since 2010, and the streaming space has grown increasingly crowded, not just with Netflix and Amazon, but also Apple TV+ and the pending arrivals of Disney+, NBCUniveral's Peacock and WarnerMedia's HBO Max.

Cutting back on streaming video would mirror Walmart's recent moves in e-commerce. The company expects to lose $1 billion on its online shopping business this year, Recode previously reported, and earlier this month sold Modcloth, an online-only brand it had acquired just two years prior. That same week, layoffs hit men's clothing brand Bonobos — an acquisition Walmart has considered offloading, but decided to keep, per Retail Dive.

Vudu isn't Walmart’s only bet on digital video. The retailer is a major backer of Eko, which produces interactive video programming. Eko could be a stronger means to connect Walmart with publishers and brands who have signaled an interest in the interactive video space.

According to The Information, Walmart could also simply be trying to focus less on video entirely and keep its energy directed on its core retail operations.