Blockbuster fires a next volley in online rental price war

December 23, 2004

Here we
go again. In a move reminiscent of those "Crazy Eddie" fire sales at a used
car lot, today C|Net disclosed that Blockbuster have now given a good right hook
to Netflix, cutting prices for online rentals by a full $2.50
a month! Ouch!

Blockbuster, the largest U.S. video rental chain, said it is
cutting the subscription price for its online rental service by $2.50 to
$14.99 a month plus tax effective immediately, guaranteed through January
2006.

The move came as Blockbuster grapples with
growing competition from online rental services operated by Netflix and
giant discounter Wal-Mart Stores.

Netflix charges $17.99 a month for online
rental subscription, while Wal-Mart charges $17.36 per month, according to
the companies' Web sites.

This is very competitive pricing and has to have Netflix
reeling. Blockbuster already admits that forgiving customers for returning
movies in late by waiving penalty fees, will hit them hard for a quarter of a
billion dollars in 2005.

Source: C|Net