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Blockbuster Gains on Netflix, Undercuts Pricing

In the hopes of competing more successfully against rival Netflix, Blockbuster is offering lower-priced plans to people who rent films online.

The new plan, Blockbuster by Mail, allows users to place online orders and get three movies for $16.99, or a dollar less than its “Total Access” offering, writes the AP. As with Netflix, the films are then mailed to the customer. Unlike its Total Access plan, Blockbuster by Mail customers will not get a free rental if they return the DVD to a store instead of mailing them back, but they will get a coupon for a free in-store rental per month.

Netflix charges $17.99 for a three-movie rental.

Blockbuster has spent aggressively to build its online business, in a market which could grow 43 percent this year, the company said. The company began the year with 2 million online subscribers and ended March with 2.8 million. That 800,000 additional customers is nearly double what Netflix brought in (487,000) during the same time period.

Blockbuster expects to have more than 4 million online subscribers by the end of the year. Netflix had 6.8 million customers at the end of March and expects to have between 7.3 million and 7.8 million by year-end.