Competition fuels price war in online DVD rentals
Although Amazon.com Inc. has yet to publicly state its plans for the online DVD rental market, word of its involvement has set off a price war among Netflix Inc., Blockbuster Inc. and Wal-Mart Stores Inc.
Netflix kicked off the competitive round on Nov. 1, when it dropped its monthly subscription fee 40% to $17.99 from $21.99 in response to an expected entrance into the market by Amazon. Amazon admits that some of its customers have asked it to launch an online DVD rental service, but has no plans to announce, a spokeswoman says.
Wal-Mart’s Walmart.com has since dropped its monthly subscription fee 8% to $17.36, and Blockbuster has dropped its monthly fee 14.3% to $17.49.
Netflix says it’s sticking to its current price, despite the price cuts from Wal-Mart and Blockbuster, because it believes its service levels set it apart from those rivals, a spokeswoman says. “We were already competing in the space and being successful when Blockbuster was at $19.99, Walmart.com was at $18.76 and we were at $21.99,” she says.
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