Wal-Mart Outsources DVD Rentals To Netflix

Wal-Mart and Netflix are describing it as a promotional deal: Netflix will promote Wal-Mart’s DVD sales on the web and in mailers to customers while the retailer will promote the Netflix rental service. It runs a little deeper that that, though. Wal-Mart is shuttering its own rental service, acknowledging tacitly that a smaller, targeted company can do the job better — and, by doing so, may make more money for Wal-Mart. Current Wal-Mart rental customers have until June 16 to tranfer to Netflix at the same price.
Netflix advised investors that the deal “would not materially impact the company’s current subscriber growth or financial performance,” But, the company said in a financial press release, that teaming with Walmart.com could strengthen its competitive position by increasing awareness and referrals. Netflix CFO Barry McCarthy is speaking at the JP Morgan 33rd Annual Technology Conference in San Francisco at 12:45 eastern. Webcast.
Deal press release.


SiliconBeat
: “Wow, Silicon Valley upstart Netflix forces giant Wal-Mart to give up its online DVD business. True, Blockbuster won’t roll over and die. But an important victory, nevertheless, at a time when most of the buzz these days is how tough it is to be a small company.”

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