James Delahunty
20 May 2005 20:13
Retail giant Wal-Mart has quit offering an online DVD rental service and instead will promote Netflix. 500 million surfers visit Wal-Mart's website annually, so it will be a major boost for Netflix which has been struggling lately. Netflix was hit by competition from Blockbuster and both have been waging a price war for months. "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."
In return, Netflix will promote Wal-Mart DVD sales to its three million customers. Wal-Mart will offer users the chance to subscribe to Netflix at their current monthly subscription price of $12.97. Blockbuster didn't sit and watch this happen without doing anything though, it has offered current Netflix and Wal-Mart customers switching to Blockbuster's online rental service two free months of rentals plus a free retail DVD of their choice.
Netflix charges $17.99 per month for customers to rent three DVDs at a time. So now with Wal-Mart out of the way, it is up to just Blockbuster and Netflix to rival. Shares of Netflix jumped as much as 24% and touched their highest level since August, before rival Blockbuster launched its own rental service.
Source:
Yahoo