Walmart-Netflix Settlement to Be Paid Out in Walmart Gift Cards?

  • Share
  • Read Later

Leave it to Walmart to find some kind of silver lining in an expensive settlement to a class action lawsuit. A California court has tentatively approved the corporate giant’s proposal to provide the 40 million Netflix subscribers their agreed upon settlement in the form of gift cards to Walmart’s website, which just happens to house Vudu, Walmart’s own streaming video service.

The settlement comes in response to a 2009 class action lawsuit that alleges Walmart and Netflix made a pact in 2005 to illicitly split the DVD market into rental and retail spaces, with Netflix backing away from the latter if Walmart backed away from the former. Walmart denied any such pact had been made, but agreed to settle the lawsuit, whereas Netflix is still fighting it in court.

(MORE: Walmart May pay $40 Million To Silence Lawsuit Over Netflix Pact)

While the settlement won’t receive final court approval until early next year, this tentative approval overrules Netflix’s objections about having to provide Walmart customer details for the approximately 40 million current and former Netflix subscribers who signed onto the service after 2005, as well as Netflix customers receiving gift cards to Walmart’s website, home to its Vudu service. Netflix describes the settlement as “the equivalent of a marketing campaign that costs Walmart only 68 cents per potential customer.”

Walmart purchased Vudu in February of last year, with a statement claiming “The real winner here is the customer.” The real loser, it seems, is Netflix, and at a time when more trouble’s the last thing the company needs.

Final approval of the settlement is expected February 2012.

MORE: Walmart Purchases Vudu: “The Real Winner Here is the Customer”

Graeme McMillan is a reporter at TIME. Find him on Twitter at @Graemem or on Facebook at Facebook/Graeme.McMillan. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.

0 comments
Sort: Newest | Oldest