Musicland's SamGoody.com And NetFlix.com Join Forces to Form Unique DVD Industry Alliance
Bridging the online and physical store DVD rental and retail sell-through markets, Musicland Stores Corporation (NYSE:MLG), the nation's leading specialty retailer of home-entertainment products and a leader in DVD sales, and NetFlix.com (http://www.netflix.com), the world's first and largest online DVD rental store, have announced an exclusive agreement designed to broaden the customer base of the DVD market. Set to launch today, both companies will support this unique alliance through links between the Web sites - SamGoody.com and NetFlix.com ñ and through consumer offers, in-store signage, and point-of-purchase merchandising. Under the agreement, the leading pioneer of e-rentals, NetFlix.com, will direct its customers to Musicland's primary Web site, SamGoody.com (SM) (http://www.samgoody.com), for DVD purchases. SamGoody.com will act as the ""buy"" side of the NetFlix.com ""Test driveô,"" the ""try before you buy program for DVD users."" Musicland will offer its customers from all Musicland stores (Sam Goody, Suncoast, Media Play and On Cue) special DVD promotions including one free rental from Netflix.com with every DVD purchase. This offer is limited to 10 per household. The sites will be joined by a comprehensive product-by-product, cross-linking program. For example, if a customer goes to ""The Matrix"" DVD page on NetFlix.com, they will be given the option to rent the DVD from Netflix.com or to purchase it from SamGoody.com. Similarly, customers who visit ""The Matrix"" DVD page at SamGoody.com will be given the option to purchase the DVD at SamGoody.com or rent it from NetFlix.com. In addition, NetFlix.com will support the partnership by sending e-mail newsletters tailored to individual interests to customers of both Web sites alerting them of upcoming new releases. As an incentive for consumers to purchase DVDs from Musicland's stores, NetFlix.com will insert coupons ranging from $2.49 off to as much as $3.49 off of DVD purchases with each of the customers' DVD rentals. NetFlix.com also will encourage customers to become members of Musicland's growing customer loyalty program, ""ReplayÆ."" Each NetFlix.com customer who registers to become a Replay member will receive eight free DVD rentals from NetFlix.com. ""Musicland's DVD sales have been nothing short of fantastic, and this alliance opens an important online avenue to boost those sales,"" Gil Wachsman, Vice Chairman at Musicland Stores Corporation, said. ""Our agreement with NetFlix.com, a prominent Internet DVD rental source enhances service to both DVD rental and retail customers, broadens the customer base for both companies and strengthens the symbiotic relationship that already exists in video between rental and retail video outlets. In addition, the close relationship between our retail stores and our e-commerce stores is one of the primary tools that both companies can use to make this agreement effective."" ""This relationship with Musicland underscores the unique and growing synergy between the online and off-line DVD rental and retail markets,"" said Reed Hastings, Chairman and CEO of NetFlix.com. ""Through this multifaceted program, we not only are building the public's awareness of DVD, but growing the marketplace as well."" NetFlix.com, the world's first and largest online DVD rental store, recently was listed as a favorite in Forbes' fall ""Interactive Money Guide"" as one of the best Web sites to visit. The NetFlix.com store, located at www.NetFlix.com, carries virtually every DVD movie --currently numbering more than 3,700 titles--and rents them to owners of DVD players. In addition to offering the world's largest selection of DVD movies, NetFlix.com provides seven-day rentals, same-day-shipping to anywhere in the U.S., easy-to-use search features, the DVD Test Drive program (a preview before buying program), advance movie reservations and multi-rental discounts. By focusing on online rentals, NetFlix.com is pioneering a new online retail model and e-commerce category. NetFlix.com currently has promotional relationships with major consumer electronics brands Sony (NYSE: SNE), Toshiba, RCA/Thomson Electronics, Panasonic, Philips, Kenwood and others. Founded in 1997, NetFlix.com is headquartered in Los Gatos, located in the heart of Silicon Valley, California. Based in Minneapolis, Musicland Stores Corporation is the leading specialty retailer of home-entertainment software products in the United States. As of June 30, 1999, the company operated 1,325 retail stores in 49 states, Puerto Rico and the Virgin Islands under the names Sam Goody, Suncoast Motion Picture Company, Media Play and On Cue. In addition to its four store formats, Musicland operates five commercial Web sites including: SamGoody.com, Suncoast.com, MediaPlay.com, OnCue.com and Requestline.com. For additional information on Musicland Stores Corporation, visit the company's Web site at http://www.musicland.com.