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Wal-Mart Has Left The Building (to Netflix)

May 19, 2005

Apparently Wal-Mart has thrown in the towel on online movie rentals, and is directing their customers to Netflix.

Wal-Mart Stores Inc. and Netflix Inc., rivals in online movie rentals, made an agreement in which Wal- Mart ends its rental business in exchange for Netflix promoting its DVD movie sales. Netflix shares soared as much as 24 percent.

With rumors floating that Blockbuster is looking to raise their rates $3 a month (or depart the online rental scene altogether), and that Amazon is considering a partnership with Netflix, this has been quite the banner week for the Los Gatos, CA based company.

Of course, this is still all liable to be short-lived. Every time broadband speeds climb up a notch, the ghost of Andy Warhol runs past their offices with a stopwatch in his hand…

A lot of the comments on other sites regarding this story complain about Wal-Mart’s shipping speed, and the fact is I’m an instant-gratification boy myself (who’d have guessed?). I stopped doing Netflix when I realized I was far more prone to drive the two blocks to the neighborhood Blockbuster and have the movie in my hand immediately than I was to add it to my Netflix queue.

The day bandwidth and compression rates cross the line to where people can stream a DVD-quality download fast enough to watch, this market segment will be history.

(via literally everyone)

Netflix Parties after Blockbuster Election

May 13, 2005

Blockbuster’s largest shareholder was elected to their board yesterday amid vows to curtail spending. Analyst’s guess as to the first target for cuts? Their online rental program, where they’re throwing money at trying to catch Netflix.

Netflix stock rose 9 percent after the vote, according to Reuters.

“Netflix investors are saying, ‘Obviously Blockbuster is going to abandon online,” Wedbush Morgan Securities analyst Michael Pachter said. “It’s not that obvious. Icahn is not in charge — he has three out of seven votes.”

Blockbuster is locked in an expensive price war with Netflix over online subscribers. Blockbuster launched its online service in August at a cost of $50 million, and said it would spend about $120 million this year as part of a plan to reach 2 million subscribers by the end of 2006.

This has to be great news for Netflix…

(via Kottke’s Remainders)

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