Netflix will take over Wal-Mart's DVD rental business. Under the deal, announced today, Netflix and retailing giant Wal-Mart will co-promote DVD sales and rentals. Wal-Mart will shut down its online rental service to concentrate on DVD sales.
The deal calls for Netflix to promote Wal-Mart DVD sales to its 3 million subscribers, and Wal-Mart will offer its online customers the opportunity to sign up with Netflix at the current subscription price for a year. Wal-Mart is the world's largest DVD retailer, and Netflix is the world's largest online DVD rental service.
Netflix will also take over Wal-Mart's online service, allowing its customers to pay the $12.97 per month guaranteed by Wal-Mart for 12 months.
The partnership radically changes the competitive landscape for the online DVD rental industry pioneered by Netflix, which more recently has been against larger rivals such as Wal-Mart and Blockbuster. The new partnership also could discourage Amazon from bringing its U.K.-based online rental service to the United States.
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