Wal-Mart hands online DVD rental to Netflix
Partnership with specialist in booming DVD market
Wal-Mart has announced an alliance in the US with online DVD rental specialist Netflix.
Under the deal, Wal-Mart will direct customers who currently subscribe to the Wal-Mart online DVD rental service to Netflix. In return, Netflix will encourage its 3m users to buy DVDs from Wal-Mart.
Netflix will gain visibility with the 500m annual users of the walmart.com website, while Wal-Mart will retain a presence in the expanding, but relatively specialist, online DVD rental market. Wal-Mart will close its own DVD rental service, which it launched in 2002. Existing Wal-mart online customers will be able to sign up with Netflix at the current subscription price of $12.97 a year.
The move makes Netflix and rival Blockbuster far and away the biggest players in the online DVD rental market in the US. Blockbuster has aggressively targeted customers since launching its service, and has responded to the new alliance by offering Netflix and Wal-Mart customers who switch to Blockbuster two free rentals and a free retail DVD.
Amazon started an online DVD rental service in the UK last year, but has so far not launched into the US market. Netflix’s deal with Wal-Mart is non-exclusive, which would allow it to form a similar alliance with Amazon. Some observers are now predicting Blockbuster will attempt to negoitiate a deal of its own with Blockbuster.
