May 28, 2005

Tragedy avoided, for now.

At dinner last night someone commented that Netflix had been bought by Wal-Mart. I hadn't heard that, and I said it would be a sad thing if true. Fortunately it turns out not to be correct. But there's still a danger here.

The good news is that what actually happened is that Wal-Mart has given up on its fledgeling online DVD venture, and Netflix has taken over its customer lists. This is a rare example of the 800 pound gorilla failing at something, and is an encouraging sign that they may not be able to take over the whole world.

In fact, although it's not an actual acquisition, the structure of the "partnership" is closer to Netflix buying WM's dvd business than the opposite.

So I'm relieved, but my fear now is whether the relatively little Netflix can fly this close to the sun without getting burned. Or a more cynical metaphor, this close to the black hole without getting sucked in.

Here're a couple of news report.

Reuters via

LOS ANGELES (Reuters) - Netflix Inc., the online DVD rental company, and Wal-Mart Stores Inc. said Thursday they have struck a deal to co-promote DVD sales and rentals, with Wal-Mart shutting down its online rental service to concentrate on DVD sales.

Detroit News Technology:

Wal-Mart Stores Inc. called it a wrap Thursday for its fledgling online movie-rental business, turning the operation over to industry leader Netflix Inc.

The move represents a rare setback for the nation's largest retailer, which had 1 percent of the online DVD market and never made significant inroads into the business.

Posted by jackhodgson at May 28, 2005 10:41 AM