Posted by Nikoletta Ventseslavova

Read if: you are looking for a good alternative to Netflix

Save: money, time and frustration

Nothing stands still – Shortly after Google+ set foot in social networking and entered into competition with Facebook, today Wal-Mart launches a video streaming service.

Trace back

Wal-Mart has been trying to deliver movies digitally to people’s homes since 2007, when the company started a movie and TV show download service in association with  Hewlett-Packard. Due to lack of customers interest Wal-Mart shuttered the site, and HP closed the division which had provided the technology.

Meanwhile, Vudu, another internet video pioneer was trying hard to persuade mainstream consumers to connect another box to their already cable-snaked televisions. After Alain Rossman (a co-founder who was an early Apple executive and a pioneer in making the Web accessible from cell phones) took the post of chief executive, Vudu stopped manufacturing hardware and turned to offering its movie store and interactive services. Later, Vudu announced deals to put its service into devices made by the largest electronic manufacturers like Samsung, Toshiba and Sharp.

In 2010 the retail giant Wal-Mart bought the Silicon Valey start-up –Vudu. While competitors like Microsoft, Amazon and Netflix offer online movie stores for Internet-connected devices like game consoles and Blu-ray players, Wal-Mart opened the doors to its digital video service, offering  its movie store and simple interactive service as a build-in  feature. Moreover, Vudu distinguishes itself from its rivals with high-definition movie streaming, simple interface and integration of other web services like Twitter, Flickr and Facebook.

Recently, Netflix were compelled to increase their rates, “because of the high expenditures of mailing DVDs to customers”. Of course, this makes sense. But, this is not the main reason. The real reason Netflix raises its price is Wall Street. Revenues per subscriber declined 14% while the company’s overall revenues grew 51%. Meanwhile, Netflix  paid subscribers grew from 10 million to 23 million. Growth  came from adding new subscribers, not by making them pay more. Experts state that Netflix understands that future sales growth won’t come from adding new subscribers, but from the average revenue they generate from existing clients.  The company’s stock price increased after the prices were raised.

What better time to compete with Netflix?

Netflix announced huge rate increases (60% up) two weeks ago, causing widespread dissatisfaction among customers. In social web sites like Twitter and Facebook  they are threatening to leave, irritated by the new pricing plan. Recently, a Business Insider story wrote that 41% of Netflix’s users will cancel their subscriptions. Let’s take a look at the numbers. Here’s how PCWorld reviewers explain the dramatic price change : “Starting now for new Netflix customers and starting September 1 for existing users, the base service will cost $7.99 per month for unlimited streaming. DVD plans (with no streaming) will cost $7.99 and $11.99 for one at a time and two at a time, respectively. To stream video and have one DVD out at a time will cost $15.98 per month. If subscribers wish to have a second DVD out simultaneously, the rate increases to $19.98 when combined with streaming capability.” In addition, the research firm TDG  reported that “70 percent of Netflix dual-service subscribers — those that use both DVD-by-mail and streaming video — are disappointed with Netflix’s new pricing scheme” and predicts “a loss of between 2.0 and 2.5 million subscribers”.

Wal-Mart debuted in the right time, offering the perfect alternative and sending Netflix’s stock price down.  Wal-Mart is customer orientated and multifunctional.
“At Walmart, one of our key priorities is to provide a continuous channel for our customers, from our stores to our powerful e-commerce and social media platforms,” said Steve Nave, general manager of Walmart.com. Customers have access to thousands of digital Vudu titles and new releases. They have the chance to purchase and/or rent them. The fans of online video streaming need only one of the 300 Vudu-enabled devices (including game Blue-ray, HDTV and game consoles)  for video playback. In addition,  they are able to stream video to their  desktop computers or laptops in Standard Definition quality. When shopping for movies or TV series at Wal-Mart customers have the possibility to select the digital Vudu title and/or the DVD.

Netflix split video streaming and DVD rentals into two separate plans of $7.99 each. Unlike Netflix, Wal-Mart doesn’t have monthly plans. Instead, it offers 24-hour rentals with a price from $ 0.99 to $5.99 (for HDX version), depending on the quality and current promotion. Typically, digital movie purchases cost about $15 for standard versions, which makes Wal-Mart attractive to customers. Moreover, Netflix’s rival makes digital versions available the same day DVD versions are released.

Read also: Amazon’s instant video streaming vs. Netflix services

Sources:

http://walmartstores.com/pressroom/news/10636.aspx

http://tdgresearch.com/blogs/press-releases/archive/2011/07/24/netflix-subscribers-crying-foul-may-be-crying-wolf.aspx

http://www.businessinsider.com/netflix-poll-results-2011-7?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+typepad%2Falleyinsider%2Fsilicon_alley_insider+%28Silicon+Alley+Insider%29

http://seekingalpha.com/article/279396-the-real-reason-netflix-is-raising-prices

http://www.foxnews.com/scitech/2011/07/26/wal-mart-takes-on-netflix-offers-video-streaming/