Did Wal-Mart Throw A Lawsuit To Get Access To Netflix Customers?
A new court ruling gives Wal-Mart a major boost in its effort to muscle in on Netlix’s streaming subscribers. A federal court in California late last week approved a class-action settlement that requires Wal-Mart to pay out $27.5 million. But here’s the key element of the ruling: Wal-Mart will be allowed to pay the 40 million Netflix (NSDQ: NFLX) subscribers in the form of gift cards for Wal-Mart.com—where there is prominent advertising for Vudu, which rents and sells movies a la carte..
The court ruling is a blow to Netflix, which had earlier blasted the settlement as “the equivalent of a marketing campaign that costs Walmart only 68 cents per potential customer.”
The class action came in response to a dinner meeting in 2005 at which the CEOs of the Netflix and Wal-Mart.com allegedly agreed to divvy up the DVD market. Consumer advocates say that under the pact, Wal-Mart agreed not to rent DVDs if Netflix agreed not to sell them. Class action suits were filed against both companies in 2009.