A Stitch in Haste

For those who lament that Wal-Mart is all-powerful in all things it touches:

Walmart.com is discontinuing DVD rentals, and its existing customers of that service will be given the option to become Netflix subscribers at their current rate for a year. Walmart.com agreed to promote and refer customers interested in DVD rentals to Netflix, the companies said in a PR Newswire statement today.

To review and repeat: Wal-mart, like any other successful business, only became prosperous and powerful by giving customers what they want. If and when a business fails to continue doing so, it loses its dominance and its "obscene" profits to others who do a better job of giving customers what they want.

But, regardless of who succeeds -- large or small, entrenched or upstart -- their success is something to be celebrated and welcomed, not feared and obstructed.

POST SCRIPT: With all the buzz about Episode III, I'll embarrass myself and admit that I still enjoy Clash of the Titans, the last of the great Ray Harryhausen adventure movies.

I haven't been following the escalating conflict between the two potential "next generation" DVD formats — Toshiba's HD-DVD and Sony's Blu-Ray — too closely.

Which is unfortunate, for several reasons:

1. It's shaping up to be a repeat of the Great VHS-Beta War of a generation ago.
2. I now seem to have an unwitting stake in the outcome, since Microsoft's Xbox 360 is HD-DVD compatible only.
3. The saga is a fascinating case study in market power.

Consider the players:

The HD DVD format is supported by Universal Studios, Warner Bros. and Intel Corp., as well as Microsoft Corp., which hopes its new Xbox 360 video game console will challenge Sony's PlayStation.

Blu-ray is backed by Apple Computer Inc., Hewlett-Packard Co. and Dell Inc., along with a variety of other tech companies and studios.

That's an awful lot of advertising budget, and lobbying capacity, and shareholder value, on either side of the contest.

One wonders whether the DVD Wars will become a prisoners' dilemma, with all these companies spending (wasting?) vast sums to try to ensure that their format wins (or dominates), only to find that they all lose out in the end, rather than finding some way for both formats to coexist.

What one does not wonder is whether this raw capitalist creative destruction (destructive creation?) is better than having government bureaucrats, either domestically or — gasp! — globally, determine which format to adopt. Private companies, all up and down the distributive chain, trying to woo private consumers. The outcome should of course be privately decided (i.e., market-driven).

Based solely on history, if I had to bet, then I would probably bet against Sony. Other than the Walkman and the PSP, every new technology they unveil flops. On the other hand, Michael Dell is right far more often than he's wrong. I also wonder whether Netflix will have any say in the matter (i.e., would they care one way or the other?).

Meanwhile, here's a related report from the Consumer Electronics Show in Las Vegas. Apparently there's a fine line between being first out of the gate and stumbling out of the gate. Go figure.

So, open thread — who will win the DVD Wars? Or will some kind of market-sharing truce be declared?