HOLLYWOOD — Wal-Mart Stores will begin testing a mail-order DVD rental service this month offering online rentailer Netflix its first major competition.
Customers of the monthly Wal-Mart DVD Rentals subscription service will be able to rent three movies at a time at a cost of $18.86 per month, more than a dollar less than Netflix’s fee of $19.95 for a similar service.
Blockbuster also has been studying the idea of online DVD rentals, though a spokeswoman said no decision will be made until early 2003. The chain is involved with Mesa, Ariz.-based DVDRentalCentral.com, which charges $19.95 for a monthly subscription that allows unlimited rentals as long as the patron has no more than four discs out at a time.
Wal-Mart’s service will offer more than 12,000 titles. A limited number of customers will be able to sign up for the service during the test phase at Walmart.com. Wal-Mart plans to roll out the service nationwide next year after using initial customer feedback to fine-tune the service.
The company has no plans at this point to start renting videos in stores, a spokeswoman said. While Wal-Mart has never directly entered the video rental business, the company had several Blockbuster locations in its stores several years ago. Those locations have all since been relocated outside of the Wal-Mart stores.
Netflix had 742,000 subscribers at the end of its third quarter, up 122% from the same period in 2001. In the second quarter, the company reported a net loss of $13.4 million on revenue of $36.4 million. Netflix will releases its full third-quarter earnings today.
Blockbuster U.K. recently launched DVD by Post, a pay-as-you-go mail-order service allowing customers to rent four titles at a time for five days. Customers pay by the rental rather than via a monthly subscription fee and return the discs by mail.
(Jennifer Netherby is a reporter for Daily Variety sister publication Video Business.)