] Wal-Mart Stores Inc. is turning over its online DVD
] rental business to Netflix Inc., signaling that the
] world's largest retailer couldn't beat the Internet
] upstart at its own game.

Not terribly surprising EXCEPT that it is Wal-Mart, who doesn't *need* to back down. Contrast with Blockbuster, who can't *afford* to back down in its competition with NetFlix.

I want to believe Wal-Mart went to NetFlix over Blockbuster, in restructuring its service, because NetFlix is both the leader and the better company. But I suspect it is because NetFlix doesn't visibly sell its discs, and is willing to agree to point its users at Wal-Mart as a DVD purchasing site. A deal that NetFlix would have been happier doing with Amazon, probably.

This deal probably isn't valid if Amazon buys them, but what could Wal-Mart do at that point, having turned away all of its customers. All of its customers, which, suspected at being around 100K, is about as many as NetFlix is signing up about every two weeks (back of the envelope calculation).