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 decision led to a class action lawsuit early last month as the companies were accused of “conspiring to create a monopoly for online video rentals.” The “collusion” between the companies led to higher prices for Netflix customers, alleged the suit.
This week, the companies find themselves facing a new class-action lawsuit of the same type, this time from a plaintiff in Chicago.
As proof that the deal in 2005 promoted “unfair trade”, the plaintiff notes that Netflix raised its average subscription price from $14.99 to $17.99 USD almost immediately after the agreement with Wal-Mart. At the time, Wal-Mart’s comparable monthly plan was $12.97 USD.
“The subscription fees charged by Netflix to Plaintiff, as well as the other members of the Class, were maintained at artificially high levels,” states the suit. “Plaintiff and the other members of the Class paid higher subscription prices to Netflix than they otherwise would have paid.”
Result for: dvd movie
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.”
Result for: dvd movie
Speaking in an interview at the International Consumer Electronics Show (CES) in Las Vegas, RealNetworks Inc. Chief Executive Rob Glaser revealed he is confident that the company will emerge victorious from a lawsuit brought against it by the major Hollywood studios. The target of the lawsuit is a software title developed by the company called RealDVD, which allows a user to copy a DVD movie, which can then be watched on up to five computers.
Hollywood’s position on the software is predictable; it enables piracy and so should be illegal and not sold by RealNetworks. A San Francisco judge halted sales of RealDVD back in October 2008. Glaser said the company is willing to make small changes to the software if it has to, but does not expect that to be the outcome.
RealNetworks claims that RealDVD does not remove the CSS (Content Scrambling System) copy protection mechanism at all. He said Friday he expects an injunction hearing will be held in San Francisco in March. Other products in the past have been successfully taken from the market by Hollywood, including the once-infamous DVDXCopy software products.
