Instead, Walmart will focus on bolstering Vudu, the video service it acquired in 2010. Vudu offers a variety of movies and shows for free with ads or for purchase that can be rented or owned. Vudu is No. 3 in pay-per-view digital video, trailing Apple and Amazon , Variety reported in October.

At a time when NBC , Disney, AT&T , Viacom, Apple and others are considering subscription services for cord cutters, Walmart is abandoning its plans, according to people familiar with the matter. The giant discount retailer opted not to move forward with a new streaming product after talks with veteran media executive Mark Greenberg fell apart last year, said the people, who asked not to be named because the discussions were private.

Greenberg, who was previously CEO of premium movie service Epix, had spoken to Walmart about developing a service aimed at "Middle America," the people said. The initial success of the "Roseanne" revival last year inspired other content creators to go after that type of audience.

But talks with Walmart broke down after Walmart couldn't get comfortable with making a large investment in content, a business where it has no real experience and where competitors such as Netflix can spend more than $10 billion a year on new TV shows and movies.

Vudu has taken a small step in the direction of original content, agreeing to retool the 1983 comedy "Mr. Mom" into a digital series. The service's focus will continue to be on a broader library of movies and shows. The Vudu business is under Marc Lore, Walmart's head of e-commerce.

"Vudu has developed a strong platform, and we aim to continue to bring our customers more content, on more devices, at the best possible price," Tara Raddohl-House, a Walmart spokeswoman, said in an e-mail.

Greenberg, meanwhile, has held talks with several other retailers, including Costco, about building out a service geared toward average Americans, but no agreement has been reached, said a person familiar with the matter. Costco didn't immediately respond to a request for comment. The company is also reportedly exploring the launch of a streaming service for its top customers.

Disclosure: NBCUniversal is the parent company of CNBC.