In Battle With Amazon, Walmart Pushes Deeper Into Entertainment

By Michael Corkery and Brooks Barnes | October 12, 2018

Walmart is going Hollywood.

The world’s largest retailer, in a constant battle with its rival Amazon, said this week that it was teaming up with two entertainment companies, one old school and the other on the industry’s cutting edge.

Metro-Goldwyn-Mayer has agreed to create short-form original series for Walmart’s ad-supported streaming service, Vudu. Those are expected to debut early next year. It is the first of many studios that Walmart expects to work with in creating new content for Vudu, a spokesman for the retailer said Wednesday.

Walmart is also investing in a joint venture with Eko, a New York startup that focuses on “interactive storytelling,” a video format that allows viewers to control the plot of commercials and television episodes.

The investment with Eko totals $250 million, according to two people briefed on the matter, who spoke on the condition of anonymity to discuss details of the deal. It is thought to be the largest bet on the interactive entertainment niche, which has long tantalized producers as a potential gold mine but has never gained widespread adoption.

“We are not trying to become a studio,” said Scott McCall, a senior vice president for entertainment, toys and seasonal at Walmart. “It is our hope that we will work with studios to reimagine what new content looks like.”

Walmart, based in Bentonville, Arkansas, has been seeking to expand its business beyond brick-and-mortar retailing. With most of the nation saturated by its big-box stores, Walmart has been experimenting with a flurry of new ventures, including starting a high-end concierge service in Manhattan and acquiring India’s leading e-commerce site, Flipkart. Now it’s turning to content creation.

Walmart’s substantial investment is a validation for Eko, which was co-founded by 37-year-old Yoni Bloch, who described himself in an interview in his New York office as “a relatively famous singer in Israel.” He has also been a judge on the Israeli version of “American Idol.”

Walmart was introduced to Eko when the retailer’s chief executive, Doug McMillon, met Bloch while visiting Israel last year.

The two companies started working together on an interactive presentation that Eko prepared for Walmart’s shareholder meeting — the annual corporate pep rally in Bentonville attended by thousands of workers.

Walmart sees interactive storytelling — essentially a video version of “Choose Your Own Adventure” books — as something that can be used in both entertainment and advertising.

There could be a cooking show, for instance, that helps viewers buy the ingredients online as they watch. Or a love story in which viewers can choose what happens to the characters. In turn, each choice could help Walmart glean insight into the viewers’ preferences and attitudes.

“The idea is around leapfrogging what everyone else is doing,” Bloch said.

A cross between a video game and traditional television, interactive storytelling has been held back by technology hurdles and tricky funding. Making one great traditional ad or TV episode is expensive enough, much less one that branches off in different directions depending on what choices people make while viewing.

Interactive content has also been hindered by a generational divide. Older consumers — and media executives — are accustomed to a passive viewing experience and have a hard time grasping this way of participating in storytelling. Younger viewers are the opposite. (Netflix already has a few interactive shows aimed at children.)

Eko is far from alone in chasing the promise of interactive content, but it has a secret weapon: Nancy Tellem. Tellem, who is Eko’s executive chairman (and also sits on the MGM board), gives Eko considerable credibility in Hollywood. She worked in senior jobs at CBS and Warner Bros. Television for roughly two decades before joining Microsoft in 2012 to create an Xbox-centered television business. Microsoft shut down her division in 2015.

For Bloch, Walmart reminds him of youthful visits to the United States.

“Walmart was to me the symbol of America,” he said. “I just remember my mom said we have to go to Walmart because everything is big and cheap there.”

He started his company in 2010 with his bandmates, many of whom had a background in computing.

Eko has attracted investments from Silicon Valley firms like Sequoia Capital, as well as establishment backers like Warner Music and Intel. In addition to the $250 million investment in the joint venture, Walmart has invested an undisclosed amount in Eko directly.

Many of the details about the joint venture are still being worked out — like where these shows or advertisements can be viewed. Walmart and Eko said they would share in any revenue.

Walmart raised its visibility in Hollywood during this year’s Academy Awards, when the company sponsored three short films, featuring the work of three female directors: Melissa McCarthy, Nancy Meyers and Dee Rees. The films, which were inspired by a Walmart e-commerce box, doubled as an advertisement for the retailer.

The first project to come from the MGM partnership, which was announced at a conference Wednesday in Los Angeles, will be a “reimagining” of the comedy “Mr. Mom,” which will debut on Vudu early next year.

McCall said Vudu would work with MGM on revitalizing other classic movies and creating entirely new content.

c.2018 New York Times News Service