Netflix Inc. is taking over Wal-Mart Stores Inc.’s online DVD rental business, a move that will give Netflix a vast new audience and could make it more competitive against rival Blockbuster.com. Financial details of the agreement were not disclosed.
Wal-Mart will continue to sell DVDs online at Walmart.com. In announcing the agreement, Wal-Mart said it wanted to focus on its fast-growing movies sales business.
Under the agreement, announced early today, Wal-Mart will close its online DVD rental business and offer its existing customers the option of becoming Netflix subscribers at their current Wal-Mart rate. That rate will be good for one year from the time they sign up.
Wal-Mart customers will be able to sign up for Netflix via a web link on Walmart.com.
In return, Netflix will promote Wal-Mart’s DVD sales online and in mailers to its 3 million subscribers.
“While Blockbuster still has the advantage of a massive offline store presence, this partnership does put the Netflix brand in front of the eyes of millions of shoppers at WalMart.com,” said Dan Hess, senior vice president of comScore Networks.
Blockbuster was unavailable for comment.
Visits to Netflix totaled 8.4 million in April, compared with 9.5 million visits for Blockbuster, according to comScore.
ComScore Media Metrix found that 1.8 million consumers visited both Wal-Mart and Netflix during April. Twenty-one percent of Netflix visitors also visited Walmart.com in April, and 9% of Walmart.com visitors also visited Netflix, according to comScore.
Netflix’s agreement with Wal-Mart is non-exclusive, leaving open the possibility that Netflix could partner with Amazon.com or other players in the DVD rental market, Barry McCarthy, Netflix’s chief financial officer, told attendees at the JP Morgan 33rd Annual Technology Conference today.
Amazon.com began offering online rental of DVDs and videos in the United Kingdom last year, and has been the subject of speculation that it would partner with Netflix, Blockbuster, or other parties.
McCarthy also says Netflix has no plans to go international. “We remain focused on winning in the U.S.,” he says.
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