Engadget once again has the best writeup you can find:

Well, it looks like Wal-Mart’s master plan to bankrupt Netflix didn’t quite turn out — the world’s largest retailer is now essentially surrenduring to the much smaller internet startup and turning over their DVD rental business.

I hope that Netflix and Blockbuster enjoy their struggle to dominate the mail rental market until the point that broadband renders them obsolete (but at this rate that may take a while).