BUSTED!!!

Actually, as a recently joined member of Netflix, I have to admit I might not be impartial on this story. After all, they do deliver movies right to my door, allowing me to overcome my lifelong fear of video stores.

But that aside, the lawsuit appears to be some pretty serious stuff. From the Los Angeles Times:

The two companies agreed in 2005 that Wal-Mart, the world’s largest retailer, would close its online rental business and refer customers to Netflix, which would promote Wal-Mart’s DVD movie sales, according to the lawsuit filed in federal court in San Francisco.

Sounds like a case of a couple companies engaging in some “you scratch my back, I’ll scratch yours” behavior. The complaint suggests clandestine meetings, beginning with a dinner shared by Netflix CEO Reed Hastings and then-Wal-Mart.com CEO John Fleming in January 2005, in which discussions began as to how the two could reduce competition in the DVD sales and online DVD rental markets. You can check out the whole complaint here. Its like reading The Bourne Identity...if it was written by lawyers. Bland, legalese-loving lawyers. But seriously, it is pretty interesting, and at 24 pages its not tooooo long, so check it out.

Wal-Mart, Netflix sued over online video rentals [Reuters]

Wal-Mart, Netflix conspired to create monopoly, suit alleges [Bloomberg via Los Angeles Times]

Resnick v. Wal-Mart, Netflix (Complaint)

This video from the Financial Times takes a look at Wal-Mart’s new small-format Marketside stores, and their close competitor Tesco’s Fresh & Easy. The analysis of the two stores is interesting: Marketside looks more polished, whereas Fresh & Easy focuses on house-brand bargains. But the most interesting - and perhaps saddest - part of the video is hearing customers’ explanations of why they like the new small format stores:

“It’s kinda like a small grocery store,” one man says. “I kinda like the idea of the local markets instead of great big stores you’ve got eight million people in.”

That is, customers are attracted to these markets because they’re like the local grocery stores Wal-Mart so frequently puts out of business. After years of flocking to Supercenters, these consumers have realized the value of shopping close to home, though still seem unwilling to support real locally-owned businesses. Marketside has all the appeal of a local store with none of the benefits: money spent there doesn’t stay in the community and its owners have no incentive to treat employees well. Wal-Mart seems to be capitalizing on the very holes its own business model has left in the retail landscape.

Big box stores go small [Financial Times]