The fight for streaming movie distribution lands Wal-Mart, Netflix in court

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There is a titanic struggle going on today over who will capture the market in delivering on-demand movies to your television screen. Among the Godzillas in the fight are Wal-Mart and Netflix, who are accused in a newly-filed lawsuit in San Francisco of attempting to carve out a monopoly in this business.

The plaintiffs hope to spin this into a class-action suit, claiming that the 2005 agreement between the defendants, in which Wal-Mart agreed to exit the on-demand streaming video market in favor of partnering with Netflix, which would in turn promote DVD sales through Wal-Mart, was anti-competitive.

The suit might have some traction in light of the new Netflix Player by Roku, a set-top reciever unit for Netflix streaming video. However, there are many other avenues of distribution for streaming video that already compete or could compete with Netflix, including cable systems, gaming systems such as xBox, wireless internet, and cell phone systems.

Having just terminated a trial of Netflix's streaming content service, it is clear to me that owners of the movies and other content, such as the media giants, are the ones that really hold the upper hand in this battle. The Netflix on-demand system worked well, but the content available was thoroughly second-rate. To create a monopoly, it would have to deliver better content, including content unavailable through other sources.

By the time this lawsuit makes it through the courts, I wouldn't be surprised if it has been made irrelevant by the evolution of the industry. I just hope that the result won't require me to buy half-a-dozen different converter boxes just to watch all my favorite movies.

Netflix and Wal-Mart Challenged

    Hoping not to become obsolete along with the DVD in these rapidly evolving high-tech times, online DVD rental leader Netflix in May introduced a new set-top movie-on-demand service, its first solution for subscribers seeking instant cinematic gratification.

    Justin Sullivan, Getty Images

    The new service will stream more than 10,000 films and television shows from the Netflix library through a device made by the startup Roku, in which Netflix holds a $6 million stake. The Roku box sells for $100, but the streaming service will be offered to Netflix subscribers for no additional cost.

    Paul Sakuma, AP

    A Blu-ray DVD player due out later this year from LG Electronics will feature similar streaming video capabililty. A competing on-demand service from VUDU, introduced in fall 2007, features more than 6,000 films and television shows.

    Jae C. Hong, AP

    In January, Apple announced downloadable movie rentals for as little as $2.99 through its online iTunes store, where they can be viewed on your PC or laptop, Apple TV or transferred to an iPod or iPhone. Films are available to view for 30 days, although they expire 24 hours after they're first played. Source: AP

    Paul Sakuma, AP

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