Wal-Mart Enters NetFlix's Business 679
wcbrown writes "AP reports that Wal-Mart is entering into the online DVD rental arena, currently dominated by Netflix. Wal-Mart is starting out with 13,000 titles, six distribution centers, and competitive pricing. With a seriously tremendous infrastructure and expansive will, Wal-Mart stands poised to overtake Netflix. To say the least, that's not going to be good for business."
Although they might do it.... (Score:5, Interesting)
All I needed was my credit card/ debit card.
Maybe they are looking to expand in both online rental and vending style?
...and no pop-under ads... (Score:4, Interesting)
I wonder if they'll have a similar "frequent renters get lower priority" scheme to what NetFlix has.
Wal-mart's business model won't work well here. (Score:2, Interesting)
Wal-mart's greatest move (from a financial gain POV) was to move into middling-to-small towns (this means towns with 4000 people or more, or county seats) and take over the businesses downtown, the mom-and-pop stores, by slashing prices. (Whether you like that tactic is irrelevant, it was enormously successful.)
Well, how much are you going to be able to slash prices on an online DVD rental? It's not like Netflix and Blockbuster are higher-priced than the market will bear.
They can try it... but I suspect it won't be a roaring success.
It's bad for cable companies, though (Score:3, Interesting)
You pick the movies you want, and some time, a few days later they are there to watch at your leisure, taking as long as you want, with pause, rewind FF.
Everything you want from video on demand except the ability to pick a movie right now and watch it right now.
Which turns out to be not so important after all. And it's a lot cheaper than putting in all those servers and 7 megabits to every home of highly reliable bandwidth.
Another example of the old adage that you should never underestimate the bandwidth of a stationwagon full of magtapes, except this time it's a postal van full of DVDs.
This may not be a catastrophe. (Score:3, Interesting)
If Netflix embarks on an even semi-intelligent ad campaign, I think they have a fighting chance.
-d
Thanks, but No Thanks (Score:1, Interesting)
It's a shame they're the largest employer in Pennsylvania.
bad for business? (Score:3, Interesting)
Its not "bad" for business, it is just business. It is competition. If walmart undercuts NetFlix by
I tend to not shop Amazon, beause I dont like thier policies, and i can usually find something at close to the same price. (And, I can usually get brick and mortar stores to match Amazon's price to get my sale.) I suspect the same thing will happen here. A lot of people DONT LIKE Wal-Mart.. and wont rent from them. But anything that kills BLockbuster and 48Hours is good, imho. I still think the ridiculously high price that they charge for DVD's will come down as people find it cheaper to rent them enough to get tired of them.
(Okay.. so its not so ridiculous anymore, but why does it seem the more successful the film in the theaters, the cheaper it is to get, but it costs three times that for something that is slightly more obscure? The costs of production of the DVD's should be about the same, shouldnt they?)
maeryk
Re:Wal-mart's business model won't work well here. (Score:5, Interesting)
At $40 or so [walmart.com] for a DVD player, who can't afford one?
Well, how much are you going to be able to slash prices on an online DVD rental?
I doubt that's the point. People do their grocery shopping at Wal-mart since groceries are there too. Now they won't have to stop by the video store on the way home either.
Re:Family fun! (Score:5, Interesting)
Re:Wal-mart's business model won't work well here. (Score:5, Interesting)
You kidding me? Where else can you get a DVD player for 40 bucks? not Rad Shack.. anything they sell has to be at least 80.. or they wont sell it. Walmart can hook you up with a passable home theater for under 500 bucks.. and they stock a fairly reasonable selection of DVDs and videos. (And yes, even pulp fiction, uncut, last time I was there looking).
So this is the next logical step for them. Super Walmarts have replaced the shopping mall for all intents and purposes. (Sure.. they sell Kmart level CRAP in most cases, but in some instances you can get good deals there.) The one here has a pharmacy, a grocery store, a pearle vision center, automotive, the usual Walmart crap, a decent electronics and sporting goods area, and an outdoors home decor shop. There really isnt any reason to shop anywhere else. (Unless you want to go to home despot for hardware..).
This is exactly the demographic they want.. the kind of people who are at wal-mart three times a week grocery shopping anyway. The difference between a scheme like this and the ill fated VHS in grocery stores, would be selection.
Maeryk
Re:Maybe not such bad news for NetFlix (Score:5, Interesting)
- last year their revenues were $200 billion us. that's more than the gdp of israel
- of the 10 richest people in the world, five are waltons (of walmart fame). you think gates is a fat cat? the waltons are downright obese!
- heck, s. robson walton may even be richer than bill! the "rich list 2001" claimed that s.r. had a personal bankroll of 65 billion, and placed him in the top slot for wealth worldwide.
- walmart has 1 million employees. three times general motors.
- however, despite all this, the average walmart employee makes only 15k/year.
how do you beat that kind of war chest?Nothing rated R at WalMart, please... (Score:3, Interesting)
I think NetFlix can survive simply on the fact that they can carry a wider selection of films...
Re:Competition (Score:5, Interesting)
Maybe now we will see some "innovations" in Netflix's offerings?
Re:The only problem for me is... (Score:2, Interesting)
Netflix is great for people like me and my roommate. The best part about netflix, IMHO, is the fact that you can keep a DVD for as long as you want it. We were the sort of people who always were paying late fees before Netflix. Now, we can keep it around until we're done with it, and then return it without the effort of even leaving the house.
And as for your lack of organization issue, remember that you get to keep a certain number of movies on hand. The number varies depending on how much you pay, but if you send your movies back after you watch them, you will have half a dozen DVDs sitting around at any one time that you haven't watched yet.
So, in other words, next time your wife and you decide on the spur of the moment to go and get a movie, instead of getting in your vehicle and driving to the DVD store, you simply walk over to your DVD player and pick one of the movies that you have lying about that you'd already decided you wanted to watch.
Re:You want to make some SERIOUS money? (Score:2, Interesting)
- privateathome.com
- X4rent.com
- xxx-dvdrental.com
- rentflixxx.com
- sugardvd.com
disclaimer: I've not tried any of these services so please don't ask me if they're any goodRe:Maybe not such bad news for NetFlix (Score:3, Interesting)
Limited Market (Score:2, Interesting)
The market to watch is when someone (like a Wal-Mart) puts thier money into the technology to develop a streaming technology or a download and play type of busniess model. Of course what that model is, I can't say (or I'd be rich!)
I think the weak link in the chain is the hardware. If I could watch movies without having to actually get a DVD or pry my kids away from the DVD player to watch a movie, it would be more appealing.
Also, there is nothing (in movie rental land) worse than getting your NetFlix rental disc after waiting 2 months and seeing that it appears to have been run over in a gravel pit. (Just return it, we'll put you back on the list).
Lastly, our stupid television media (techno-morons) had this story last night and said Wal-Mart was going to now compete directly with Blockbuster for the video rental market. No mention of NetFlix whatsoever. Shows an interesting perspective on what the true perception of the "masses" are about what technology exists.
Dave
WALMART hs Much Obscure stuff, anime (Score:1, Interesting)
Now I feel guilty, I actually dont care that Walmart uses slave labor in third world countires because I want these cartoons so bad!
Re:The market is self-correcting (Score:3, Interesting)
The point, though, is that an economic juggernaut like Wal-Mart has the ability to erect such significant barriers to entry once it achieves market dominance that no future competition can exist. Capitalism and the free market are nice models, but they are ultimately unbalanced. As soon as some entity has accumulated a huge portion of any given market, then that market is no longer free.
Your point about taking the market for granted is well-made, but it is a separate issue. There you're not talking about capitalism or free market economics, you're talking about business practices and inertia -- dangers which lurk for companies of all sizes.
Re:The market is self-correcting (Score:1, Interesting)
IOW, there will never be any real competition. It will always be sporadic and doomed to fail. Other businesses will come and go, but Wal-Mart perseveres. Yay, capitalism.
Re:The market is self-correcting (Score:3, Interesting)
The issue here is that mega-corporations like WalMart (and companies like them) have the ability to subsidize long periods of losses in one division (by even giving product away for FREE) to achieve market dominance and force out little players.
Once in a monopoly position, their power is even more significant, because they can further erect barriers to entry beyond simply impossibly low price expectations. For example, they begin invoking patents, pushing for new legislation, establishing single-vendor agreements with suppliers/distributors, and more.
We've seen ALL of this done before. The examples the Slashdot community is most familiar with are no doubt Microsoft, but they didn't invent Monopoly business practices, they just play it very well.
Your idealist view of the free market sounds like it came from a 7th grade economy textbook. It sounds great on paper, but it just doesn't work that way. I don't mean this as a flame, but it is dangerous when intelligent people (as you appear to be) maintain overly-simplified views of matters of this importance. For example, your last sentence regarding Capitalism. Capitalism doesn't "work" or "not work". It's just a pretty good man-concocted system for keeping economics in rough order, and it has its flaws like any other system.
Re:The market is self-correcting (Score:2, Interesting)
Netflix will probably always survive because you can rent movies that are controversial, but I don't like it when a company has such an impressive control over the content of their products.
That aside, Walmart has every right to not sell "questionable" or "offensive" material and consumers have every right to support this by shopping at Wallmart.
Re:Thanks, but No Thanks (Score:2, Interesting)
Re:Competition (Score:3, Interesting)
What is so unfair about Wal-Mart moving into the online DVD rental business?
There's nothing specifically unfair about Wal-Mart get into the online DVD rental, except that they can absorb huge losses while they wait for their competition to die.
That may seem like it's just the breaks of being in business, but Wal-Mart's brick-and-mortar store strategy is to open up so many Wal-Mart's in an area that it cuts into everyone's bottom line, even that of the other Wal-Mart's. Then when all the mom and pops are gone and any other competitors -- surprise! -- all the Wal-Mart's but one are closed. Net effect, fewer jobs and zero choice about where to take your business.
This is a "vertical" example of the same thing. Now that many American's have no place to shop and work other than Wal-Mart, they have to leech into other sectors of the economy in order to grow, and growth is the only important thing in American business these days. Doing what you do well (as Netflix does, in my opinion) doesn't count any more. Whatever you do, you have to do it more and more, no matter how bad you get at it because you're doing too much.
This is bad because only being able to choose what Wal-Mart sells is no real choice, and because Wal-Mart has very specific ideas about what you should be able to buy.
Re:The market is self-correcting (Score:2, Interesting)
When you start considering Walmart's ability to throw it's collective weight around in the supply chain, said barriers to entry become even more formidable. You want to service a niche in the DVD rental market. Hard to do it if the various distributors will only supply you if you buy thousands of copies of a broad part of their catalog, only 5% of which may make sense to your business model...
Again, I'm all for capitalism--but don't sugar-coat the difficulty of carving a niche out, even one ignored by the big players.
propane tanks (Score:5, Interesting)
I didn't mind walmart when sam walton was still kicking, it seemed like they at least made an effort to have "made in USA" stuff in abundance, and didn't have weird polices like this propane deal (and what they will probably do with DVDs-good call there), but now,since he's died and who knows who is running it as an economic division of the chinese peoples liberation army, I've about almost completely removed them from sucking on my wallet. Once in a great while I get stuck, and have no recourse but to go in there, and every time I see aisle after aisle of lost homes, lost jobs, lost equity, lost cars, basically a lot of lost hopes and dreams disgusied as cheap trinkets, like what were used to purchase manhattan island. Trinkets, ohhh shiny and cheap.
They are that-cheap. Cheap as in price, cheap as in quality, but very expensive with a bigger look at when once those dollars leave the shores of the US and cease acting as an economic force multiplier.
Netflix *Does* Penalize Regular Renters (Score:4, Interesting)
P2P Netflix (Score:2, Interesting)
Basic idea is that arround you -- your dorm, co-workers, etc.-- there are thousands of DVDs. If you pool them into groups and share amonst yourselves you'll never need Blockbuster.
Statistically, it works: average DVD owner buys 15 a year, rents 30. With these numbers, the average person has access to thousands of DVDs around them already.
And yeah, I wrote this code for this site, so I'm biased..