Andre Yoskowitz
17 Jan 2009 12:43
In 2002, the retail giant Wal-Mart decided to launch an online DVD rental business, in an effort to rival Netflix. However, Netflix did what it has to all its other competition and practically drove the startup out of business.
By 2005 Wal-Mart decided it was a waste of money and let Netflix take over its DVD rental operation while Netflix would promote Wal-Mart's in-store DVD movie sales.
This week though, that decision is back in the news as a lawsuit has been filed against both companies accusing them of "conspiring to create a monopoly for online video rentals." The "collusion" has led to higher prices for consumers, alleges the suit.
The deal between the companies also "enabled Netflix to maintain monopoly power and led Blockbuster Inc. to raise subscription rental prices by $3 to meet Netflix's higher prices."