investors (or traders) in netflix appear to like the news that wal-mart is ceding its place in the online dvd rental market.
fending off a category-killer like wal-mart is a good thing. as it does in most of its pricing, wal-mark took the low cost route--~$13 for two titles at a time a month. despite this low price point, wal-mart garnered fewer than 100,000 subscribers. netflix admits picking up these customers won't necessarily improve their outlook.
however, wal-mart's pull-out may signal a few troubling things. it could mean a natural limit to netflix's addressable market. this could mean the all-you-can-rent model of dvd rental may be a niche market not ready for the mainstream market that comprises wal-mart's sweet spot. it also may mean the finances don't particularly compute.
while the service netflix provides may be great, the business model appears suspect. despite being a market leader, pricing power remains elusive evidenced by the yo-yo up (from $20 to $22) and down (back down to $18) netflix underwent within a 6 month period last year.
maybe, i'll get more positive when i take part in a gift subscription i got from some of my buddies.
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