Wal-Mart has announced it would terminate its online DVD rental service and provide its customers the option of converting their subscription to Netflix at their current rate for a year. In return, Netflix will promote Wal-Mart’s DVD sales online through their website. Wal-Mart will direct customers to Netflix via their own website.
Blockbuster retaliated by raising their rental price to $18 as a test, which is a pretty weird thing to do when you are an underdog. This tie-up of Netflix and Wal-Mart effectively puts an end to the earlier rumors of Amazon teaming up with Netflix for DVD rentals, and could pose a huge opportunity for Blockbuster.
Netflix, with its new $9.99 one-at-a-time DVD plan, and formidable library of titles is a tough competitor. Their shipping times are great, even in a smaller city like Milwaukee. I have been a subscriber for a long time, and although I did sample the other services’ free offers, would not dream of canceling my Netflix subscription. Netflix now has about 3 million subscribers.
This is one of the few times where an under-dog has taken on a behemoth like Wal-Mart, and won. Then again, this is a new game, and the rules are different.