Recent price hikes have been somewhat of a PR mess for Netflix, and the company now has a new competitor—Walmart.
The retail giant announced Tuesday that it will now sell access to streaming movies on its Web site via video service Vudu, which Walmart bought in February 2010. Visitors can tap into the Vudu library and purchase or view movies directly from walmart.com/vudu.
Shoppers can still buy physical DVDs or Blu-ray discs, but there will also be the option to select the digital title. If you go digital, complete the sale via Walmart.com's normal check-out process, and the movie can be streamed from walmart.com, vudu.com, or any Vudu-enabled devices like the Boxee Box and PlayStation 3.
To promote the new service, Walmart is asking its Facebook fans to select a movie that will be offered at a discount this Friday. To participate, "like" Walmart's Facebook page and choose between three movies: Diary of a Wimpy Kid 2: Rodrick Rules, Harry Potter and the Deathly Hallows: Part 1, or Gnomeo and Juliet. The movie that gets the most votes by 5pm Eastern Wednesday will be available to rent for 99 cents on July 29.
"With VUDU becoming increasingly popular among our customers, we’re providing them more access to enjoy this digital entertainment experience directly online at Walmart.com," Steve Nave, senior vice president and general manager for Walmart.com, said in a statement.
The announcement comes one day after Netflix reported that 75 percent of its subscribers have signed up for its streaming-only plan and that its shipments of DVDs via mail have likely peaked.
In a note to shareholders, Netflix said its largest competitor over time will likely be a cable channel that improves its Internet video on-demand services, like HBO GO.
"Over time, both the DishOnline application and the HBO GO application, amongst others, will likely get built into smart TVs or be available in smart TV app stores," Netflix wrote. "While HBO GO and Netflix do not have overlapping content, and many consumers subscribe to both Netflix and HBO, we do compete with HBO for studio content and for viewers’ time. Our task is to consistently improve the quality of our service and stay two steps ahead, so that consumers will continue to enjoy Netflix."
Netflix said it was also "mindful" of Hulu Plus and Amazon Prime, though it noted that Hulu Plus added 325,000 subscribers in the second quarter to Netflix's almost 2 million. "We invest much more than Hulu Plus in content, in marketing, and in R&D," Netflix said.
The company also denied that it has an interest in purchasing Hulu "because most of its revenue is from providing free ad-supported streaming of current season TV shows, which is not our focus."
When it comes to Amazon, Netflix said it has "vastly more streaming content" and is available on more devices, so "we haven’t detected an impact on our business from Amazon Prime."