Feeds

Wal-Mart cedes DVD rental biz to Netflix for a plug

Dot-com conquers retail giant

  • alert
  • submit to reddit

Intelligent flash storage arrays

Super, hyper, global, mega store Wal-Mart has given up on renting DVDs via the mail, deciding instead to form a partnership with upstart Netflix.

Wal-Mart will turn over its DVD rental customers to Netflix. In exchange, Netflix will plug DVDs that Wal-Mart has put up for sale on its web site. Existing Wal-Mart customers can become Netflix members at their current monthly rate of $12.97 (for two movies out at a time), if they sign up for a year's worth of the service. Most of Netflix's customers shell out $17.99 per month to have three movies out at a time.

In the requisite shared love quotation, Netflix CEO Reed Hastings said, "This agreement bolsters both Netflix's leadership in DVD movie rentals and Wal-Mart's strong movie sales business, while providing customers even more choices and convenience."

This is surely a blow for Wal-Mart which has tried hard to craft new online markets for selling items such as low-cost Linux PCs and songs. None of these businesses, however, seem to be doing terribly well. In our experience, Wal-Mart's DVD rental service suffered from a lack of efficiency, taking much longer than Netflix to send out new titles.

As word of the deal broke, shares of of Netflix jumped as much as 32 percent in pre-market trading. Investors, however, recoiled a bit after Netflix issued a statement saying the Wal-Mart customer infusion would not have a material impact on its business or subscriber growth.

Netflix ended the day up more than 4 percent at $16.13 - still well off its 52-week high of $36.57.

A number of reports pegged Wal-Mart's DVD rental subscriber count at close to 100,000 people. By contrast, Netflix has close to 3m subscribers.

Shared rival Blockbuster tried to counter Netflix's win by offering a deal to Walmart.com and Netflix subscribers of two free months of rentals and a free DVD if they'll switch stores. ®

Related stories

Movie downloads will be a big business... but for whom?
High Definition and the future of viewing
Amazon UK rents DVDs
TiVo loses its MoJo
Netflix delays UK launch

Choosing a cloud hosting partner with confidence

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
US court SHUTS DOWN 'scammers posing as Microsoft, Facebook support staff'
Netizens allegedly duped into paying for bogus tech advice
Feds seek potential 'second Snowden' gov doc leaker – report
Hang on, Ed wasn't here when we compiled THIS document
Verizon bankrolls tech news site, bans tech's biggest stories
No agenda here. Just don't ever mention Net neutrality or spying, ok?
NATO declares WAR on Google Glass, mounts attack alongside MPAA
Yes, the National Association of Theater Owners is quite upset
prev story

Whitepapers

Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.