Wal-Mart Hopes to Nix Netflix
Topic Services Marketing
Key Words Services, movie rentals
InfoTrac Reference CJ102973149
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News Story 

DVD rentals are in high demand, and Wal-Mart, Blockbuster, and Netflix are in a three-way competition to see who can mail out the most DVDs at the lowest price and greatest convenience to customers.

Netflix has received much attention for the development of its popular mail-order movie-rental service, and for shocking Wall Street analysts by turning profitable in 2003. The company's increasing notoriety and profitability have enticed Wal-Mart and Blockbuster to seek a piece of the DVD rental action.

Wal-Mart customers now have the option of paying monthly subscription rates of $15.54, $18.76 or $21.94 for unlimited movie rentals, based on whether they want two, three or four titles out at one time. There are no late fees. That compares with Netflix's basic subscription of $19.95 for three movies at a time.

So far, the response has been very strong from Wal-Mart's customers, although Netflix's service is still way ahead of the game. While current estimates put the number of Wal-Mart's subscribers at near 50,000, Netflix still leads the pack with about 1.1 million customers.

Questions
1.

What characteristics of the movie-rental industry distinguish it as a service?

Source Maria Halkias, "Wal-Mart Expands Online DVD Rentals to Compete with Blockbuster, NetFlix," Knight Ridder/Tribune Business Service, June 11, 2003, pITEM03162040.
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