Wal-Mart is stepping up their assault on NefFlix. They’ve lowered their prices, and are expanding their service. I think they have a much better chance of being successful in this space than Blockbuster because they don’t have the same cannibalization issues. I’m partial to NetFlix because I’ve been a customer for so long, and I’d like to see the little guy win. But I think their stock is in for some short-term pain due to this Wal-Mart threat.
Edit to add: More discussion of this battle here.
Wal-Mart has far too many distribution points for Netflix to contend with, which will rapidly erode their position. For example, Wal-Mart can offer its DVD rentals online and then allow customers to drop them off at any of their retail stores (in addition to returning them directly via mail). Think customer convenience… In addition, drop-offs provide another sales opportunity for Wal-Mart in terms of their other products. Besides that, Wal-Mart has intense brand recognition and a large, loyal customer base. Can anyone say “Neflix acquisition”? Wal-Mart is a BEAST…
Wal-Mart is indeed not to be toyed with. Just look at the damage they are doing in the super-market sector. I’m not so sure that having drop-off locations is that big of deal though (assuming they even allow online customers to return to a store). NetFlix has 1 day turn-around in most of the country now. So it’s much easier for me to just drop a DVD in a mailbox. If Wal-Mart allows people to return and pick-up in person, that might be a killer. But then you run the risk of them not having much of a selection at a given store. What makes NetFlix so ill is that they have EVERYTHING in their warehouse. That’s a tough feature to contend with, especially if you have many small distro. centers.