by WSJ staff article WASHINGTON — Wal-Mart Stores Inc. and Amazon.com Inc. may not be able to reach a deal to keep prices for their popular e-book and movie-streaming services below the prices they pay to distributors, a person briefed on the matter said Friday.
Wal-mart, Amazon and other major retailers could have difficulty reaching a deal with Amazon or Netflix Inc. to keep those services competitive with traditional pay-TV operators, said the person, who was not authorized to discuss the matter publicly and spoke on condition of anonymity.
The person said Wal-Marts decision to lower prices may mean it will not be possible for Amazon and Netflix to keep the services competitive in an era of cord cutting, when consumers increasingly are opting to watch on devices such as Roku and Apple TV.
The discounting comes amid a wave of consolidation in the movie and TV industry.
The biggest retailers have cut costs and slashed prices, making them less attractive to consumers looking to rent or buy movies, TV shows and other entertainment products.
The companies have been selling digital products at significantly lower prices.
Walmarts chief executive, Doug McMillon, has repeatedly called the discounts a result of the company’s aggressive price cuts and said it would continue to do so as long as it was possible to keep customers happy.
Netflix has been offering $7.99 to $12.99 streaming subscriptions for its most popular shows and movies, but the company is expected to offer a higher price at some point this year, according to people familiar with the matter.
The deals are a way for retailers to compete with cable providers such as Comcast Corp. and DirecTV, which have struggled to attract customers and retain them, people familiar have said.
Walmart is already the biggest retailer in the industry with more than 2.7 million U.S. stores, according in the most recent count, but that number is expected in the tens of millions for the year, analysts say.
In a statement, Wal-marts CEO Greg Wasson said the company has always been committed to lowering prices for our customers.
“With our commitment to providing a low price for all our customers, we have always worked to ensure that the cost of delivering a digital product is below the cost that we pay for distributing it,” Wasson wrote in the statement.
The company also has said it is willing to consider offering a $7-a-month price for movies and TV shows, but it is not currently pursuing that approach.
Walmart, which has been cutting prices for its customers since the start of the year to bring them in line with Amazon and Amazon Prime, said last month it would start cutting prices of some items, including its grocery items, starting next week.
In its latest quarterly earnings report, Walmills stock rose $6.60, or 4.1%, to $44.70.
Walmart, which is expected by analysts to report results in the first quarter of 2019, has struggled with slowing sales.
Its stock has fallen over 30% this year.
Netflix is the most popular online streaming service, with more customers than any other U.s. company, but its revenue fell to $9.8 billion in the second quarter, less than half its previous revenue of $28.2 billion, according for the latest data from research firm Strategy Analytics.
Netflix said last week that it had surpassed its revenue target for the quarter.
Wal Mart said last year that it would be cutting prices by as much as $6 per item for most items, which it said would make it more appealing to customers.
The move to lower the prices for many of its items is a way to compete against traditional pay TV operators such as Dish Network Inc. Dish, which offers Internet TV services such as Direc-TV, has said its customers have become more willing to watch streaming content.
Netflix and other services such have tried to reach deals with the cable companies, which are struggling to compete.
Dish and Comcast, which both have a majority of U.,S.
cable subscribers, have tried in recent years to get content on streaming services.
Netflix announced in December that it was partnering with Time Warner Inc., the parent company of HBO, to offer HBO Go, which will include streaming video on smartphones, tablets and connected TVs.
Netflix also has begun offering HBO GO to customers of Apple TV, which does not have an Internet-based version.