Walmart CEO Predicts Soft Sales as Amazon Readies Prime Video Ads

At the start of the month, the CEO of Walmart explained challenges in predicting the post-holiday sales outlook for 2024. Meanwhile, Amazon is mastering the art of balance by cashing in on ads, inserting them into Prime Video content from Jan. 29 onward.

During an interview with CNBC on Dec. 6, Doug McMillon rang up concerns about consumer spending, citing elevated credit card balances and tightened household budgets and casted doubt on the extent of their expenditures despite their recent resilience.

“If we had been talking last spring or at the beginning of last year, I expected more softness by this time of the year than we’re actually experiencing,” McMillon said.

“Next year’s a different story.”

McMillon said deflation has introduced new complexities, with a 5% decrease in prices for general merchandise such as toys and electronics compared to last year, while food prices remain approximately unchanged from the same period in 2022.

He mentioned that Walmart’s nonfood sales volume has started to recover, boosted by back-to-school shopping.

“It’s going to be interesting to watch what happens in the general merchandise categories in the year ahead because prices are so much lower,” McMillon said.

Read more: Walmart CEO: Next Year’s Spending Patterns Tough to Forecast

Amazon Inserts Ads in Prime Content

Meanwhile, the upcoming Prime content change from Amazon is set to reach customers in the U.K., Germany, and Canada on Feb. 5, with subsequent availability in France, Italy, Spain, Mexico and Australia later this year.

Amazon announced its intention to incorporate “limited advertisements” into Prime, aiming to sustain investments in compelling content and progressively enhance such investments over an extended period.

Amazon informed its subscribers that they have the choice to pay an additional $2.99 per month for uninterrupted content without commercial breaks.

“We aim to have meaningfully fewer ads than linear TV and other streaming TV providers,” Amazon said.

In September, Amazon initially revealed its intentions to introduce ads to Prime Video.

In a Wednesday report, PYMNTS highlighted that several streaming services have been adopting advertisements.

“Netflix, for instance, launched its ad-supported tier last year, though the tier’s underperformance earlier this year caused the platform to expand, seek more or different ad partners, adjust prices and innovate placements,” PYMNTS wrote.

“Meanwhile, Warner Bros. Discovery’s Max streaming subscription has seen its shift to ad-supported models helps drive revenue increases.”

Read more: Amazon Prime Video Latest Streaming Service to Follow Netflix in Tapping Ads

Meanwhile, PYMNTS delved into various strategies employed by streaming services to generate revenue beyond subscription fees and advertising sales last week.

For instance, Disney+ is reportedly exploring the possibility of introducing shopping options on its streaming platform, while Amazon has initiated the provision of recommendations for other products and services through its Prime Video X-Ray feature.

Interestingly, consumers appear willing to pay extra for streaming services. According to “New Reality Check: The Paycheck-to-Paycheck Report — The Nonessential Spending Deep Dive Edition,” a collaborative effort between PYMNTS Intelligence and LendingClub, 25% of respondents indicated that they indulge in nonessential spending on streaming services.