Futuríveis
domingo, maio 22, 2005
DVD Rental Wars: Netflix 1, Wal-Mart 0
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Just a year ago, many were calling Netflix as good as dead after the gazillion-dollar gorilla Wal-Mart stomped in on their turf. (Just a taste of the David and Goliath thing going on here: Netflix's 2004 revenues, at $506 million, is what Wal-Mart makes in less than a day.) But today, Netflix looks quite alive and kicking. This morning, Wal-Mart announced it would shutter its online DVD rental business and direct customers to Netflix. In return, Netflix will remind its customers that they can buy DVDs on Wal-Mart's web site.
Netflix still has a hill to climb--it expects to lose $5 million to $15 million this year. But news like this gives renewed hope that innovative upstarts with a breakthrough idea and a customer-centric model can win out over mass and price. At the very least, it's inspiration to us all. Let's hear it for the little guy.
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Fast Company Now
Netflix Takes Over Wal-Mart DVD Rentals
UPDATE
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Blockbuster did not take long to crash the party. Within hours of Netflix announcing a deal to absorb Wal-Mart's online DVD rental customers, rival Blockbuster had muscled in.
The video rental group is offering Wal-Mart or Netflix customers two months of free rental and a free DVD to keep if they switch to Blockbuster. It will also match the Netflix or Wal-Mart rental fee. That could mark a serious escalation of hostilities if Blockbuster puts big marketing dollars behind the offer.
However, it feels more like a knee-jerk response from a company that was caught out by a rivals' deal. In fact Netflix, which pioneered the online DVD service, has enjoyed a rare run of good news. First, the appointment of activist shareholder Carl Icahn to Blockbuster's board could mean the group tries makes its online business profitable sooner, by cutting marketing or raising prices. That would slow its growth, making life easier for Netflix. Second, Amazon has not thrown its weight into the market. Third, the Wal-Mart deal takes an albeit small competitor out of the market and gives Netflix a link to the popular Walmart.com site.
Together, those factors should make life easier for Netflix. But they do not help answer the question of how big the market really is, and whether Blockbuster and Netflix can both become sustainably profitable with their current prices. The 80 per cent surge in Netflix shares from their March lows has already factored in all the good news.
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FT.com / Lex - Lex: DVD rentals
Just a year ago, many were calling Netflix as good as dead after the gazillion-dollar gorilla Wal-Mart stomped in on their turf. (Just a taste of the David and Goliath thing going on here: Netflix's 2004 revenues, at $506 million, is what Wal-Mart makes in less than a day.) But today, Netflix looks quite alive and kicking. This morning, Wal-Mart announced it would shutter its online DVD rental business and direct customers to Netflix. In return, Netflix will remind its customers that they can buy DVDs on Wal-Mart's web site.
Netflix still has a hill to climb--it expects to lose $5 million to $15 million this year. But news like this gives renewed hope that innovative upstarts with a breakthrough idea and a customer-centric model can win out over mass and price. At the very least, it's inspiration to us all. Let's hear it for the little guy.
...
Fast Company Now
Netflix Takes Over Wal-Mart DVD Rentals
UPDATE
...
Blockbuster did not take long to crash the party. Within hours of Netflix announcing a deal to absorb Wal-Mart's online DVD rental customers, rival Blockbuster had muscled in.
The video rental group is offering Wal-Mart or Netflix customers two months of free rental and a free DVD to keep if they switch to Blockbuster. It will also match the Netflix or Wal-Mart rental fee. That could mark a serious escalation of hostilities if Blockbuster puts big marketing dollars behind the offer.
However, it feels more like a knee-jerk response from a company that was caught out by a rivals' deal. In fact Netflix, which pioneered the online DVD service, has enjoyed a rare run of good news. First, the appointment of activist shareholder Carl Icahn to Blockbuster's board could mean the group tries makes its online business profitable sooner, by cutting marketing or raising prices. That would slow its growth, making life easier for Netflix. Second, Amazon has not thrown its weight into the market. Third, the Wal-Mart deal takes an albeit small competitor out of the market and gives Netflix a link to the popular Walmart.com site.
Together, those factors should make life easier for Netflix. But they do not help answer the question of how big the market really is, and whether Blockbuster and Netflix can both become sustainably profitable with their current prices. The 80 per cent surge in Netflix shares from their March lows has already factored in all the good news.
...
FT.com / Lex - Lex: DVD rentals
posted by CMT, 5:08 da tarde
