netflix.jpgWow, Silicon Valley upstart Netflix forces giant Wal-Mart to give up its online DVD business. True, Blockbuster won’t roll over and die. But an important victory, nevertheless, at a time when most of the buzz these days is how tough it is to be a small company. Just in from Associated Press:

SAN FRANCISCO — 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.

Under the agreement announced Thursday, Wal-Mart will offer its existing online DVD rental customers the chance to continue their subscriptions with Los Gatos, Calif.-based Netflix at their current price for the next year. Wal-Mart also will begin promoting the Netflix service on its Web site. In return, Netflix’s Web site will remind its subscribers that they can buy DVDs from Walmart.com…

…Netflix still expects to lose $5 million to $15 million this year as it tries to thwart Blockbuster Entertainment Inc.’s aggressive push into online DVD rentals, but getting Wal-Mart to drop out of the competition represents a major victory for the tiny company.