Breaking News: Netflix Takes Over Walmart DVD Rentals

The LA Times is reporting that Netflix is taking over Walmart's DVD rental program.

Wal-Mart is offering its existing online DVD rental customers the chance to continue their subscriptions with Los Gatos-based Netflix at their current price for the next year. Those who don't sign up with Netflix by June 17 will lose their service. Wal-Mart plans to continue promoting the Netflix service on its Web site.

In return, Netflix will remind its subscribers that they can buy DVDs from Walmart.com.

Netflix issued a press release which included the following:

In connection with today's joint promotional announcement with Walmart.com, Netflix, Inc. advised investors that it believed the agreement would not materially impact the company's current subscriber growth or financial performance and, as a result, the company is not revising the guidance it provided on April 21, 2005.

Netflix remarked that teaming with Walmart.com strengthens the Company's competitive position as the popularity of Walmart.com and the Web site's traffic offer an opportunity for increased awareness and referrals to the Netflix service.

Reports have put the total number of Walmart subscribers between 100,000 and 250,000, but the deal has significant strategic potential for Netflix.

Update: Evan sent in a screen capture with a Walmart ad on the Netflix site.

Aron sent in a shot of the Walmart site recommending Netflix.

Comments

[Evan]

Yup........ads already in my Netflix queu

[Jnetty]

Yeah, that's the first thing i notice this morning a Ad on the main page. I was wondering about that until i came here and read the story about taking over walmart dvd rental.

[Guy B. Jones]

The Wal-Mart ad seems to only appear on the main Netflix web page. I haven't seen it anywhere else. I'll admit it's a little weird seeing it there, though.

There's no denying this deal is a coup of sorts for Netflix. Netflix deserves credit for getting a concession from a company that doesn't back down or taste defeat very often. I'm just somewhat disappointed at the association with Wal-Mart. The company is an 800-pound gorilla, to be sure, and yet its anti-union, low wage, scant benefits policies don't sit well with me. I don't buy anything from them anymore- it's not a company I would support. I'll still get my DVD's at Amazon.com.

[Sonja]

You know I had the feeling Wal-Mart would not last too long. Folks that I knew who tried the service ended up with Netflix or Blockbuster.

[RM]

The real steal for Netflix would be if they will be able to leverage WalMart's purchasing power with the studios to get better prices on their discs. Even a couple cents drop in purchase price per disc could lead to big savings. WalMart: "give our buddies a break on the rental discs or we'll put your movies at the back of the rack"

[Kathryn]

I wonder if this will have any effect on the selection that Netflix offers, since Wal-Mart is notorious for, shall we say, offering a selective selection in their stores. And I for one, am very glad that Netflix allows the user to close the banner ads and never see them again.

[greg]

it just seems like wal-mart has given up. it did not want to build the distribution centers like netflix or blockbuster. so netflix came in an bought/inherited the customer base. i do not think it will have any effect on the price of dvd's to netflix or change netflix's selection of disks.

[Manda]

I'm a bit saddened by this news. I was one of the few to find redeeming characteristics in Walmart's service, even if I eventually turned to Netflix.

I wonder if Netflix will also aquire Walmart's rental inventory. There were a few titles they had that Netflix still does not carry.

[vn]

Walmart made a half-hearted attempt at online rental. They could have tried to integrate rentals with sales but didn't and watched the fight between netflix & bb from the sidelines. BB is trying to morph into a rental AND retail company and didn't have the right synergy to integrate with walmart. So now we have netflix as pure internet rental company and amazon as a retail company and bb as internet + B&M rental + retail. BB wears too many hats and it may be difficult to sustain it. The question is if BB raises the monthly subscription to be on par with netflix, can netflix command a premium by raising its fees? Otherwise, where is the money?

[scott]

I am a little upset at this too. Walmart always had what I wanted in stock (tv shows) and BB never seems to. When I used Netflix, they never seemed to have anything in stock.

[Dona]

Yeah, I noticed the Walmart advert this morning and wondered if Netflix had always had ads and I had not noticed or if it was new, but I didn't dwell on it. Now that you mention it, I am annoyed that they would do this.

[Aron]

I just like seeing the Walmart site sing the praises of Netflix.

[paul]

I too am quite disappointed with the alliance. For information about Walmart's questionable business practices check out: http://www.walmartwatch.com

I don't shop at Walmart or Sam's anymore, and will now have to make a tough choice about Netflix since I do like the service so much. Trying to maintain your ethics, morals, and integrity can be such a bitch in this global economy.

Interesting take from NYC's hot neighborhood of Williamsburg, Brooklyn:

http://www.freewilliamsburg.com/archives/2005/05/_netflix_and_wa.html

Is there the chance of a backlash?

[TREY]

oh yeah, one down (wmt), one to go (bbi), NFLX is the champion once again. Go NETFLIX! SERVICE WINS YEAH!

[Michael]

I'm happy for Netflix investors because this'll make them have more confidence in the company, but being from a very pro-union family, I'm quite unhappy with the decision to do it with Walmart. I whole-heartedly sent the email from that website (though I reworded it myself) saying that I would reconsider my business with Netflix because of this, and I am serious when I tell them that.

[ghlu]

Very Interesting news
http://www.blockbuster.com/switch

Blockbuster Announces Incentives for Wal-Mart and NetFlix Online Rental Subscribers
Thursday May 19, 1:49 pm ET
Subscribers to WalMart.com or NetFlix Who Switch to Blockbuster Online(TM) to Receive Two Free Months of Service, Free Retail DVD and Guaranteed Price of Their Current Subscription Plan for One Year

[Michael]

Sounds like a good deal...interesting though...Blockbuster says it will match the "terms" and "price" so if you were on, say, 3 at a time at $17.99 with Netflix, I guess that means Blockbuster will charge the same.

why would i want to switch to blockbuster and keep my netflix price? netflix is more expensive?

[CaT]

Anybody checked out the blockbuster site today? When I was just on, there was a link for 2 free months for anybody cancelling from Netflix or Wal-Mart and starting a Blockbuster plan. Has anybody done this?

[CaT]

After the landing page, click on the movies tab, and it's right below the mini Q.

[LJ]

http://www.blockbuster.com/switch

wow. I just did it. two months free. Thanks!

So how long before the "coupon" sites get ahold of a Wal*Mart or Netflix cancellation notice so you can take a copy, fill in your name and e-mail address, and get in on the BBI offer? Heck, anyone with a modest CGI hacking skillset could set up a web page "mad lib" site that would mail you a (phony) cancellation notice you could then forward to BlockBusted^Hr to get in on the deal.

and your point is??? a lot of people might do this.

Great call Captain Obvious

And what's next. People might sign up for Netflix under a different address or credit card than they use now, and immediately cancel and forward that notice?

[Pinball Mars]

Couldn't you also conceivably cancel Netflix at some point before your billing date, forward the cancellation e-mail to Blockbuster, and then go right back and restore your Netflix membership? Then you could have both services at the same time, while getting Blockbuster free for two months.

I've never cancelled Netflix so I don't know what their method is, but when I cancelled Blockbuster a few months ago, I found out that they preserve your queue for something like 90 days and within that time, you can restore your old Blockbuster membership.