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DVD Rental Wars: Netflix 1, Wal-Mart 0

Just a year ago, many were calling Netflix as good as dead after the gazillion-dollar gorilla Wal-Mart stomped in on their turf. (Just a taste of the David and Goliath thing going on here: Netflix’s 2004 revenues, at $506 million, is what Wal-Mart makes in less than a day.) But today, Netflix looks quite alive and kicking. This morning, Wal-Mart announced it would shutter its online DVD rental business and direct customers to Netflix. In return, Netflix will remind its customers that they can buy DVDs on Wal-Mart’s web site.

Netflix still has a hill to climb–it expects to lose $5 million to $15 million this year. But news like this gives renewed hope that innovative upstarts with a breakthrough idea and a customer-centric model can win out over mass and price. At the very least, it’s inspiration to us all. Let’s hear it for the little guy.

FCS