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Wal-Mart takes on Netflix again

Retailer launches video-streaming service after its rival raises prices

“True Grit’’ is among the movies that can be viewed through Wal-Mart’s new video-streaming service. “True Grit’’ is among the movies that can be viewed through Wal-Mart’s new video-streaming service. (Wal-Mart Stores via Associated Press)
By Mae Anderson
Associated Press / July 27, 2011

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NEW YORK - Now playing: movies at Walmart.com.

Yesterday, the world’s largest retailer started streaming many movies the same day they come out on DVD, in a second bid for a share of Netflix Inc.’s business and just two weeks after Netflix announced new price increases.

Wal-Mart Stores Inc. bought the video-streaming service Vudu.com 18 months ago and now offers 20,000 titles that can be viewed on almost any device with Internet access.

Movies are available at Walmart.com to rent for $1 to $5.99 or to purchase for $4.99 and up. Wal-Mart is not offering subscriptions, making its service more similar to Apple Inc.’s iTunes, which charges $3.99 to rent newly released movies and $14.99 to buy a movie.

Another competitor is Hulu.com, which offers a premium service for $7.99 a month with more back-season shows and more movies. Without a subscription, Hulu viewers can watch shows and movies free in exchange for watching advertising.

The movie offering fits with the Wal-Mart website’s strategy of offering a “seamless continuous shopping service,’’ said Steve Nave, a senior vice president who is the general manager of Walmart.com.

Wal-Mart’s announcement comes on the heels of Netflix’s saying it will raise rates and charge separately for streaming and rental DVDs. Its second price increase in eight months, Netflix’s planned increases could amount to 60 percent for existing customers, starting Sept. 1. New subscribers have to pay the new prices immediately.

Netflix plans to charge $16 a month for services that used to cost $10 a month when bundled together, for example. It’s still charging $8 a month for streaming, which it launched late last year. But instead of charging $2 more for a plan that includes one DVD at a time by mail, the company will charge $8 and up for DVD plans.

Customers have taken to the social media sites Facebook and Twitter to vent their anger over Netflix’s increases, but executives said they anticipated the reaction. The company’s willingness to risk alienating subscribers signals it needs more revenue to cover rising costs.

Through June, Netflix had 24.6 million subscribers in the United States.

Wal-Mart has tested the movie-rental waters before. It previously offered a DVD-by-mail service. But it ceded that program to Netflix in May 2005, letting customers continue their subscriptions with Netflix without a rate hike.