AfterDawn: News

Wal-Mart and Netflix sued over 'conspiracy to create a monopoly'

In 2002, the retail giant Wal-Mart decided to launch an online DVD rental business, in an effort to rival Netflix. However, Netflix did what it has to all its other competition and practically drove the startup out of business.

By 2005 Wal-Mart decided it was a waste of money and let Netflix take over its DVD rental operation while Netflix would promote Wal-Mart's in-store DVD movie sales.



This week though, that decision is back in the news as a lawsuit has been filed against both companies accusing them of "conspiring to create a monopoly for online video rentals." The "collusion" has led to higher prices for consumers, alleges the suit.

The deal between the companies also "enabled Netflix to maintain monopoly power and led Blockbuster Inc. to raise subscription rental prices by $3 to meet Netflix's higher prices."

Written by: Andre Yoskowitz @ 17 Jan 2009 12:43

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• 20 comments

• ZippyDSM

  This is not a monopoly not with all the smaller DVD rental places still working.
  
  Lets see 1 DVD unlimited though wallmart for 3$ a month! and 3 for 5$!!

  17.1.2009 14:06 #1

• lwment

  Originally posted by ZippyDSM: This is not a monopoly not with all the smaller DVD rental places still working.
  
  Lets see 1 DVD unlimited though wallmart for 3$ a month! and 3 for 5$!!I agree. This will just get dragged through the courts and in the end nothing will change except both Netflix and Walmart will be even bigger. This is just a waste of time, effort and money.

  17.1.2009 14:27 #2

• b18bek9

  who filed the lawsuit? i was wondering how this came up out the blue when netflix has been getting their hands in everything now with the streaming stuff threw your tv from step top boxes an so on. Love netflix so keep up the good work and i really dont think this is gonna go anywhere besides wasting ppls time in court but hey the lawyers will get a good chunk of change.

  17.1.2009 15:01 #3

• imnomyth

  Other companies are just pissed because they never thought dvd rentals via mail would work, and waited WAAAAAAY too long to try and compete. Same is true for the Bill Gates haters. Give credit where credit is due. All the lawsuits will do is cause them to lose money and jack up prices. Is that what people really want???

  17.1.2009 16:37 #4

• gallagher

  I love Netflix. They just need to get more on-demand movies (which I am sure is not their fault but scummy Hollywood wanting more and more money for it).
  
  Whatever happened to Blockbuster? I thought they were going to destroy Netflix with their free in-store rentals (along with game rentals) when you got the online subscription.
  
  Netflix has done well because they offer a good product with name recognition. Their website is easy to use. If you do not like it, start you own and make it cheaper.

  17.1.2009 18:15 #5

• BIGTOXY69

  The fable of the Fox and the CRow !!! The Crow had found a particularly juicy & sweet bunch of grapes and had taken them up to his favorite Branch in his favorite Tree to eat ! Along Comes The Fox Who besides being cunning and Wiley is hungry too ! Fox begins to Charm the Crow ! I say Crow you are the Blackest and Shiniest Crow I have ever seen and the most handsome crow I've ever seen as well ! truly all other Crows are but pale comparisons to you and they must envy you greatly ! The Crow Being Somewhat Vain begins to strut and gloat along the branch ! The fox now lays it on really thick - Surely such a fine and Noble Bird like yourself is also kind and generous as well as handsome ! Could you give me some grapes my fine friend Because I am hungry and I like Grapes too ! The Crow shakes his little Birdy head No to the Fox And Mumbles get your own to the fOx !!! The fox gets mad and Says who wants your old grapes anyway They are probably sour !!!!! - Hearing this insults the Crows Pride " No they're not Crows says!!!" and when he opens his beak to say that the grapes fall to the ground and Fox gets his grapes !!! - Beware of Both Sour Grapes and Pride - The Entertainment industry alays wants to Kill any technology that it feels threatens it's livelylood & purse strings - They've rallied and cried about everything from VCR's, Cassettes, MP3's ect... and eventually the very Thing they try to squash ends up generating a revinue stream for them!! But being composed of mostly lawyers they are want to do what lawyers do Sue Sue Sue !!!!! and get their money that way !!! - But realistically aslong as their are outlets to download media Legally or otherwise be they Movies, Music or what ever and pay per view on cable/sattelite outlets then walmart/netflix can't have a complete monoply - I see this more as a Let's drive the little guy out of bussiness and have more market share for us which is what companies like walmart & home depot do !!!!

  17.1.2009 18:34 #6

• DXR88

  you can sue for conspiracies. dame hold on. (searches the internet for government conspiracies) found over 703,000 results to sue the government for.

  18.1.2009 01:36 #7

• garmoon

  Quote:Whatever happened to Blockbuster? I thought they were going to destroy Netflix with their free in-store rentals (along with game rentals) when you got the online subscription. Blockbuster was doing fine, I had switched from Netflix. The idea was great. But it was killing the B&M BB stores with the 3 rentals when you brought back rentals by mail. Then BB got greedy went from $20 to $25 (3 out at a time) /mo, then 3 months later to $35 and I canceled the next day.

  18.1.2009 18:47 #8

• ZippyDSM

  Quote:Quote:Whatever happened to Blockbuster? I thought they were going to destroy Netflix with their free in-store rentals (along with game rentals) when you got the online subscription. Blockbuster was doing fine, I had switched from Netflix. The idea was great. But it was killing the B&M BB stores with the 3 rentals when you brought back rentals by mail. Then BB got greedy went from $20 to $25 (3 out at a time) /mo, then 3 months later to $35 and I canceled the next day.
  BB is flawed trying to use profit from the online side for the B&M is dumb then killing the online side with high prices...I mean..... Netflix still beats them in price/quality unless you go past a BB store bi weekly.

  18.1.2009 20:00 #9

• SProdigy

  Quote:Quote:Quote:Whatever happened to Blockbuster? I thought they were going to destroy Netflix with their free in-store rentals (along with game rentals) when you got the online subscription. Blockbuster was doing fine, I had switched from Netflix. The idea was great. But it was killing the B&M BB stores with the 3 rentals when you brought back rentals by mail. Then BB got greedy went from $20 to $25 (3 out at a time) /mo, then 3 months later to $35 and I canceled the next day.
  BB is flawed trying to use profit from the online side for the B&M is dumb then killing the online side with high prices...I mean..... Netflix still beats them in price/quality unless you go past a BB store bi weekly.When reading this, the exact same idea popped into my head. How can BB compete when Netflix' only overhead is distribution centers and not B&M stores?
  
  Keep in mind too that BB was built on franchising, just like the local McDonalds: just another mouth to feed, that probably wants their share from the online revenue stream, or doesn't want to participate at all.

  19.1.2009 12:47 #10

• garmoon

  I have also, 2 weeks ago, canceled my Netflix account. Never could get a new release quick enough, meaning Tuesdays. And the streaming videos on the pc movies were so old and bad that no one would waste their time. If you're going to stream videos, get the movies people might watch.

  19.1.2009 15:29 #11

• ThePastor

  Netflix has only one competitor...
  
  "The Pirate Bay"

  19.1.2009 20:09 #12

• rlessmue

  Originally posted by ThePastor: Netflix has only one competitor...
  
  "The Pirate Bay"...so: Netflix + The Pirate Bay = A happy life?!
  
  Cheers!

  20.1.2009 16:06 #13

• DXR88

  netflix is better i can get my blueray rips faster :)

  21.1.2009 01:26 #14

• ZippyDSM

  Quote:Quote:Quote:Quote:Whatever happened to Blockbuster? I thought they were going to destroy Netflix with their free in-store rentals (along with game rentals) when you got the online subscription. Blockbuster was doing fine, I had switched from Netflix. The idea was great. But it was killing the B&M BB stores with the 3 rentals when you brought back rentals by mail. Then BB got greedy went from $20 to $25 (3 out at a time) /mo, then 3 months later to $35 and I canceled the next day.
  BB is flawed trying to use profit from the online side for the B&M is dumb then killing the online side with high prices...I mean..... Netflix still beats them in price/quality unless you go past a BB store bi weekly.When reading this, the exact same idea popped into my head. How can BB compete when Netflix' only overhead is distribution centers and not B&M stores?
  
  Keep in mind too that BB was built on franchising, just like the local McDonalds: just another mouth to feed, that probably wants their share from the online revenue stream, or doesn't want to participate at all.BB is going to have to cut some exec pay and managerial roles, alter its subscription setup to if you do not have a subscription you pay about 4$ a day per item regardless of item and forget the new release price scheme malarkey you are just pushing people away with all the price schemeing.
  
  If you chose a subscription plan they could break down into these
  
  Basic Subscription
  3$ a week= 1 free item(max of 4), 2$/2day rentals
  15$ a month= 2 free items(max of 2), 2$/2day rentals
  35$ a year= 2 free items(max of 4), 2$/2day rentals
  
  Premium Subscription
  10$ a week= 2 free item(max of 8/mo), 1$/2day rentals
  25$ a month= 2 free items(max of 8/mo), 1$/2day rentals
  75$ a year= 2 free items(max of 22/yr), 1$/2day rentals
  
  Gold Subscription
  20$ a week= 4 free item(max of 12/mo), 0.25$/day rentals
  50$ a month=4 free items(max of 12/mo), 0.25$/day rentals
  125$ a year=4 free items(max of 46/yr), 0.25$/day rentals
  
  Now heres the kicker online and B&M are the same, there are no ship charges for the consumer and the consumer can return to the store to end the rental period faster. the Consumer is given a total of 4 to 5 days for online rentals before charges start soaking in.
  
  The consumer may use their allotted free time to pay for late fees.
  Late fees would start 24 hours after the return deadline, free items don't start soaking up late fees for 4 days after they are rented, late fees are the daily rental fees.
  
  Now tell me oh wise and greedy consumers here at AD is this not beneficial to both business and subscriber?
  
  Oh and weekly/monthly subscription fees you pay as you go if you are not renting that week/month you don't pay.

  21.1.2009 10:10 #15

• rlessmue

  Originally posted by DXR88: netflix is better i can get my blueray rips faster :)
  ...and you can get your covers here...if you need them!
  http://www.cdcovers.cc/list/dvd/a
  
  Cheers!
  

  http://i294.photobucket.com/albums/mm112/gobble3666/attemptingtogiveadamn0uc.gif

  21.1.2009 10:11 #16

• SProdigy

  Zippy,
  
  Hollywood had a subscription service called MVP, where you could go in the store and rent 3 movies out at a time. You could bring them back at any time with no late charges.
  
  It cost about $15 a month, the same as Netflix, but didn't include the "latest" new releases, which were usually the guaranteed titles, the stuff that has been out less than 3-4 weeks, but included EVERYTHING else in the store.
  
  It wasn't perfect, but it beat waiting for Netflix, unless you wanted something new. If you were into "building" a video library at home, this was the easiest way to amass movies, which I assume is what most people use Netflix for in the first place.
  
  And, if you can't wait for the newest of the new, there's always free Redbox rentals around the corner.

  21.1.2009 15:14 #17

• martin280

  I like netflix. I primarily used it for TV series, rather than movies. For movies I have other sources.
  

  SGC Special Ops
  http://stargate.mgm.com/specialops/link.php?urlid=48&id=7871
  http://stargate.mgm.com/specialops/link.php?urlid=49&id=7871

  25.1.2009 12:56 #18

• ZippyDSM

  Originally posted by SProdigy: Zippy,
  
  Hollywood had a subscription service called MVP, where you could go in the store and rent 3 movies out at a time. You could bring them back at any time with no late charges.
  
  It cost about $15 a month, the same as Netflix, but didn't include the "latest" new releases, which were usually the guaranteed titles, the stuff that has been out less than 3-4 weeks, but included EVERYTHING else in the store.
  
  It wasn't perfect, but it beat waiting for Netflix, unless you wanted something new. If you were into "building" a video library at home, this was the easiest way to amass movies, which I assume is what most people use Netflix for in the first place.
  
  And, if you can't wait for the newest of the new, there's always free Redbox rentals around the corner.I don't care for new movies..I have fansubs.... *hides*
  LOL
  
  Besides the net has new sht fast and it will tell me if something is worth paying for or not. ^^
  

  Fallout 3 has stole my soul, for about 30 hours till the paint wore off.... even if its a action focused FPS RPG, at least its a FPS RPG not a under deved shooter like Bioshock!

  25.1.2009 13:08 #19

• Gneiss1

  Just a personal note from a shut-in. NetFlix is an ideal gift for us, with DVD players selling for so little. (Those with a computer in the room can run near the bed a high-resolution, envelope-shaped screen and watch ordinary, wide-screen DVDs in remarkable resolution, using a good video card that interpolates pixels.)
  
  For about US$200 a year, one can find a new DVD each day in one's post box. My wife passes by a postbox the same time each day, so I just timed the response time between having her drop one to be mailed and having one arrive to calculate how many DVD I needed out at a time. In my case, only three - the minimal.
  
  So, with timing, I can view the DVD and extras twice: the afternoon it comes, and the next morning; then another arrives.
  
  I'm not into instant gratification and have a Mac, so I enjoy principally ancient television mini-series (Brideshead Revisited) and unique series (The Prisoner, The Avengers, Dr Who). When organized properly, NetFlix deliveries can prove an indispensable service for the infirm and other shut-ins.

  1.2.2009 17:53 #20