Netflix To Take Over Wal-Mart DVD Rentals

[smearbrick1]

http://news.yahoo.com/s/nm/20050519/wr_nm/retail_walmart_dc

LOS ANGELES (Reuters) - Wal-Mart Stores Inc (NYSE:WMT - news), the world's largest retailer, on Thursday said it was closing its online DVD rental business and would direct customers to Netflix Inc. (Nasdaq:NFLX - news), the company that pioneered online rentals.

Shares of Netflix jumped 19 percent in early trade, reaching their highest level since October when the company cut prices to compete with an online service launched by rival Blockbuster Inc. (NYSE:BBI - news).

Under the agreement, Netflix will promote Wal-Mart DVD sales to its 3 million subscribers, and Wal-Mart will offer its online customers the opportunity to sign up with Netflix at their current subscription price for a year.

Netflix will promote Wal-Mart's online movie sales business both on the Netflix Web site and in mailers sent to Netflix subscribers.

The partnership radically changes the competitive landscape for the nascent online DVD rental industry.

"This is big," Fulcrum Global Partners analyst Stacey Widlitz said. "That's pretty significant for (Netflix). I would say they are gaining back some traction in the fight with Blockbuster."

Shares of Netflix, the world's largest online DVD rental service, rose $3.00 to $18.50 on Nasdaq, while shares of Wal-Mart rose 27 cents to $47.85.

Netflix said in a statement that the addition of Wal-Mart's subscribers would not "materially impact" its subscriber growth, and it would not revise its guidance. Netflix has said it expects to reach 4 million subscribers by the end of 2005.

Wal-Mart launched its online DVD rental service in late 2002, but never promoted the service heavily. Its departure from the fast-growing online rental industry leaves only Netflix and Blockbuster, which has reported having more than 750,000 subscribers.

Wal-Mart did not disclose its number of subscribers.

Walmart Online, in an advertisement on its Web site, said the company will not accept new members and offered a link to Netflix, where Walmart.com customers can sign up for the DVD rental service at their existing Walmart rates for one year.

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

Widlitz said the agreement between Netflix and Wal-Mart probably would not deter Amazon from entering the U.S. market, leaving the possibility of a similar partnership open to Blockbuster.

"I don't think the battle is over here," she said. "To team up with Amazon is probably as powerful on the Web as teaming up with Wal-Mart."

The two companies have been locked in an expensive price war since last fall, when Blockbuster launched its online service and twice undercut Netflix's subscription price.

Shares of Netflix plunged by as much as 75 percent since last summer, hitting a two-year low of $8.91 in March, as it changed its strategy to sacrifice profits for growth in the face of growing competition.

Netflix will take over Wal-Mart's online service, allowing its customers to pay the $12.97 per month guaranteed by Wal-Mart for 12 months, the companies said.

The Wal-Mart Web ad also provided a link to allow its subscribers to transfer their services, including request lists for specific DVDs, to Netflix.

[dvdguy4]

So much for walmart taking over the world.
Walmart shouldnt of ever gotten into online rental services anyway. There better at selling the dvd than renting them. Leave that to Netflix and Blockbuster.

[HatchetMan]

That is cool. I would love to see Amazon team up with Blockbuster next. That would rock!

[EvilWizardGlick]

At Democratic Underground the anti-Walmart crowd is foaming at the mouth. many have already canceled their Netflix membership.
Walmart engenders true hatred in people.

[NiteLite]

That is cool. I would love to see Amazon team up with Blockbuster next. That would rock!

Looks like it may happen since Amazon was leaning toward Blockbuster after talks with both BB and NF... and now that Netflix takes over WalMart customers...
Blockbuster has serious problems reading a map so personally I hate to see Amazon team with BB.
WalMart deserves to go out of the game with the ignorance of the their team that tried to get into the game to start with. (5 days to get a movie 20 miles away, yeah right)
Hope Amazon goes solo.

[deadskullz]

I never cared for the selection Wal-Mart had avilable as it was never what I wanted. And I could never find them older films like Sniper & Sniper 2 however this is a good victory for NetFlix and I wouldn't be surprised to hear of other companys dropping out. After all NetFlix does have the best selection avilable even far better then it's rival BlockBuster. Although I do have to say that BlockBuster is getting better in their delivery service taking only 1-2 Days in Rhode Island, USA which I live. But they have alot to work on like having more copy's of the newest releases avilable.

Thanks,

[somebodeez]

Ahh so that's why I started seeing a big ol' Walmart banner on NF.

[Bronx]

Walmart banner on Netflix

[Rookie64]

This defeats the purpose of having Walmart as an alternative for selections Netflix doesn't carry - they still don't carry Walmart's alternate titles.
This is a downside if you were renting from Walmart and are already signed up with Netflix...you gain nothing and end up missing out on some rentals.



Blockbuster is offering this deal if you cancel Walmart or Netflix -

http://www.blockbuster.com/homepages/displayPage.action?channel1=Movies&channel2=walmart&nav=false

[lordsmurf]

This defeats the purpose of having Walmart as an alternative for selections Netflix doesn't carry - they still don't carry Walmart's alternate titles.

Many times, neither did Walmart. I joined Walmart and added about 55 different discs to my queue, things Netflix didn't carry, my reason for joining, only to have my queue purged a few days later, with maybe 5 items remaining on LONG WAIT that I never got. They dumped the entries from inventory for those 50 or so purged ones.


Walmart DVD Rentals ... .... good riddens to bad rubbish.

[Rookie64]

Walmart DVD Rentals ... .... good riddens to bad rubbish.

Yea, I agree their service sucked...they were much slower also.

Still, I was mainly using them as a backup for titles that were out at the other outlets or for stuff that only Walmart carried.

[akrako1]

I just suggested to Netflix that they set up a system with Wal-Mart where folks could return Netflix DVD's to Wal-Mart, Wal-Mart would scan 'em, and Netflix could instantly send out your next disc. Hopefully this could help Netflix's turn-around times a bit. We'll have to wait and see...

[aanaravs]

Kinda related, but a good (?) move from Blockbuster:
http://www.blockbuster.com/homepages/displayPage.action?channel1=Movies&channel2=walmart&nav=false