From USA Today

Netflix takes over Wal-Mart's online DVD rental business

SAN FRANCISCO (AP) — Wal-Mart Stores (WMT) is turning over its online DVD rental business to Netflix (NFLX). Under the agreement announced Thursday, Wal-Mart is offering its existing online DVD rental customers the chance to continue their subscriptions with Los Gatos-based Netflix at their current price for the next year. Those who don't sign up with Netflix by June 17 will lose their service. Wal-Mart plans to continue promoting the Netflix service on its Web site.

In return, Netflix's Web site will remind its subscribers that they can buy DVDs from Walmart.com.

The companies didn't disclose how many customers Netflix will inherit nor the financial terms of their partnership. About 70% of Wal-Mart's DVD rental customers pay $12.97 a month for the right to check out up to two titles at a time. Most Netflix customers pay $17.99 a month for three titles at a time.

Wal-Mart is believed to have fewer than 100,000 online DVD subscribers, said industry analyst Dennis McAlpine of McAlpine Associates.

Shares of Netflix surged after the agreement was announced.

But as McAlpine said, "This is a nice deal for Netflix, but it still doesn't mean Netflix will win the game."

Netflix still expects to lose $5 million to $15 million this year as it tries to thwart Blockbuster Entertainment's (BBI) aggressive push into online DVD rentals, but getting Wal-Mart to drop out of the competition represents a major victory for the tiny company.

It takes Wal-Mart less than a day to surpass Netflix's 2004 sales of $506 million.

Formed in 1999, Netflix has attracted 3 million subscribers and shaken up the home entertainment industry by establishing a new way to rent DVDs.

The Netflix service, which costs $17.99 a month, requires subscribers to create an online wish list from a library consisting of more than 40,000 titles and then delivers up the DVDs through the mail.

Netflix allows subscribers to keep up to three DVDs for an unlimited amount of time without late fees. Once a DVD is returned in postage-paid envelope, Netflix sends out the next selection on the subscriber's online list.

The concept caught fire as more households bought DVD players and surfed the Internet, inspiring Wal-Mart to introduce a copycat service more than two years ago.

After initially deriding Netflix as a passing fancy, Blockbuster is investing heavily in an online rental service that costs $3 a month less than Netflix.

Blockbuster has budgeted $170 million for its online expansion and underscored its resolve to win back customers by dropping the late fees that inspired Netflix to launch its alternative approach. Eliminating the late fees reduced Blockbuster's first-quarter revenue by $145 million.

Blockbuster expects to have 1 million online customers by next month, but its long-delayed response to Netflix's increasing popularity irritated many shareholders. The angst sparked a rebellion by the company's largest shareholder, billionaire Carl Icahn, who last week won a battle to win three seats on Blockbuster's seven-member board.

Online retail giant Amazon.com (AMZN), which launched an online DVD rental service in Britain last year, has also been expected to enter the U.S. rental market.

Meanwhile, Netflix is aiming to add an additional 1 million subscribers by the end of the year.

The cutthroat competition has battered Netflix's stock, which has plunged from a high of $39.77 reached early last year. The company's shares closed Wednesday at $15.50 on the Nasdaq Stock Market.

Contributing: Reuters

I'm going to write a letter to netflix condemning the partnership w/ wal-mart. If they continue promoting wal-mart dvd's then I will switch to blockbuster. Netflix can burn if they want to partner with the corporate world's largest human rights violator.

and boom goes the dynamite

Blockbuster sucks ass. They're selection has and always will be, weak.

I won't abandon netflix just because of this. They've been too good to us so far.

As long as the XXX Porn Emporium doesn't merge with Dr. Love's Fantasy Pen, everything else is gravy.

I'm glad to see you promote slave wages, abhorrent work conditions, the general assualt on human rights, and degradation of the American middle and lower class.

I don't think we have to go THAT far. I think they're just merging one aspect of the corporation and that's the friggin video library. I believe they'll still use Netflix's hub of operation as is.

Netflix will still be independent. It's just that anything Wal-mart has a hand in (aka promoting netflix and netflix doing likewise) IMO is indirectly supporting Wal-mart no matter how miniscule it may be. And supporting Wal-mart (and Target and another corporation who does most of there trade w/ China) to me seems unacceptable.

It's gotta start somewhere.

I hate going to Walmart. Too croweded. However, I prett much have to go for something every couple of months. And I am doing a project for work (it's charity)with them, and I must admit they have been very accomodating.

Also I'll be upfront and say I am completely ignorant to the attroticies committed by Wally world. While I will never condone using slave labor, aren't these issues alot larger than Walmart?

I don't know, Wal-mart's pretty fucking large. China's 8th largest exporter. Larger than most countries. Wal-mart ships jobs to China and tells people that they're saving them money by lowering the costs of their products. The same people who lost there jobs then have to work at a Walmart where they are paid minimum wage, can't unionize, are given you zero healthcare, and need government subsidies to survive. Sounds like a pretty shit deal to me. Oh, and then there's the whole issue of labor rights and human rights in China. People being paid the equivelant of $50 US a month. No bathroom breaks, sweatshops, etc.

So do you really think if we all stop shopping at Walmart. It will start a train reaction that will bring democracy to China?

I hear your point, and I agree it's a shitty deal for the Chinese. But just think there is larger issues like the Chinese Government than Walmart.

I try to stay local with my money for several reasons, and that's why I rarely shop at Walmart. I like the service at Mom and Pop, and I like being known. I also like to keeping all of my money here.

I can deal with mega-Viacom. I can even deal with Viacom-China. Slave labor on the other hand, I cannot deal with. Apparently it sits well with you though.

No, but I don't think you should keep doing something you don't believe in just because you can't change it. Pretty apathetic.

We all pick our battles and have our own "priority issues". I didn't say it couldn't change. I just don't think switching from netflix to blockbuster will matter.

I assure you, if I find Blockbuster's business practices unethical, I will go to renting from local ma and pa stores around Chicago.

GET




OVER




YOURSELF!!!

It's good to see you have something intelligent to add to the conversation as usual.

I assure you, if Blockbuster found a way to save money through using slave labor, they'd do it. Also, I might be wrong, but I don't believe that Blockbuster workers have a union either...

and no one is saying that they're Pro-slave labor here (yet)... but Netflix seems to offer a better quantity/quality of service than Blockbuster online does even though they're a bit more expensive. I wonder what kind of clothing you wear/food you eat/etc. in your complete avoidance of both China and slave labor...

Oh my bad dude, I interupted you being a jack ass and calling people out for shopping.

I buy American made clothing.

<======wondering the same exact thing.


And this= Get over yourself