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Netflix VS. Walmart

Techstination feature for Thursday, July 10, 2003

A dot com survivor takes on Wal-Mart. Bloomberg Boot Camp, a report on today's technology. Wal-Mart has dropped the price for its online DVD rental service... charging 15.54 a month for a subscription that allows customers to have two movies out at a time... .and 18.76 for up to three movies out at a time. That undercuts NetFlix... the Internet company that originated the online DVD rental business. NetFlix CEO Reed Hastings...

"Well you can see just how desperate they are to try to compete with us. They launched their service almost 9 months ago. They've gotten almost no traction. And in the same time, since they entered the business, we've raised our revenue guidance twice. And what's happened is the more energy they put into the market, the more it validates the market and the more consumers come to NetFlix because we've been doing the business for four years. We know it inside out. We've got 20 distribution centers around the country so consumers get overnight delivery from NetFlix. We've got the biggest selection, over 15 thousand movies. And the system works well cause we've got over a million subscribers that have tuned it for us."

And Hastings says his company doesn't intend to lower its subscription rates to match Wal-Mart...

"We're not planning on lowering prices. I don't think it matters one bit to a consumer, the one dollar a month. What they want is a service that actually works.

NetFlix faces more competition from the big video rental chain Blockbuster as well... which plans to launch a competing service..that will allow subscribers to get movies by mail or pick them up in store... starting next year. Bloomberg Boot Camp, I'm Fred Fishkin.