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Yahoo confirmed today that they are test marketing subscribers on a program where if someone is willing to use their search engine they would offer incentives. They listed several incentives and asked their sample audience which they liked the most.

One of the incentives listed (the best in my opinion) was a discount on NFLX memberships. Instead of paying 17.99 per month, subscribers would pay 10.99 for the 3 at a time program.

http://news.com.com/2061-10811_3-6037090.html

YHOO and NFLX make a perfect fit together. Both are silicon valley startups and they would benefit tremendously by partnering together. YHOO is qucikly becoming a media company and dvd distribution arm seems like a natural fit. Everybody has been focused on AMZN, but if AMZN doesn't want to play nice, then why not let YHOO contribute to the commoditization of the DVD.

This might be great news for NFLX, but it's a terrible development for the video stores. Between their debt, high fixed costs and old economy management, they will never be able to affectively respond. By subsidizing their rental costs with advertising revenue, NFLX can hurt BBI in a way that they can't match.
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