Friday, May 20, 2005

A Win for the Good Guys!!

Wal-Mart has thrown in the towel! Despite a well-promoted and funded start and countless fears that they would easily kill off at least one of their major competitors...it turns out that people don't want to rent their DVDs online from the Walton Clan. Today's NYT reports that Wal-Mart has decided to abandon their online DVD rental business and refer all of their existing customers to Netflix.

This is quite the victory for Netflix. Not only to they kill off a major potential competitor (even if an unsuccessful one), but...even better...Wal-Mart agrees to refer it's existing customers to Netflix and not Blockbuster. Not too long ago, people were predicting Netflix's imminent demise at the hands of Wal-Mart and it's tremendous DVD sales business and customer loyalty. The fact is (and I remarked this at the time) - they were too late. By the time they got in, Netflix was already sporting a solid and loyal customer base. Even Blockbuster has had trouble making a serious dent in Netflix - they're still at less than a third of Netflix's online business (though they still have their brick-and-mortar operation, so they're a bit like comparing apples and oranges).

Still...anytime Wal-Mart has to give up and surrender...it's a good day.

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