Blockbuster Bloodies Netflix

"Blockbuster's management has alluded to the potential for an increase in pricing," says Bartley. "Of course, the effects of that will depend on the magnitude, the timing, and the details of the Total Access membership offering and what it looks like. Right now, the combination of online, mail-order service and brick-and-mortar stores is compelling to customers that live near a Blockbuster store, as so many people do."

Some observers view Blockbuster's aggressive ad spending to market Total Access as short-lived, especially since activist investor Carl Icahn has taken control of the company. Historically, Icahn has been critical of Blockbuster's capital investment strategy, calling it a waste of money for shareholders.

"I don't see any reason why Blockbuster is going to become less aggressive," says Pali Research analyst Stacey Widlitz. "Some people are expecting Icahn to install a new CEO to cut off the ad spend, but I doubt that will happen. They might cut some other things, but I don't think they're going to just turn off the faucet and milk this thing for cash, because they've made a lot of progress and they're starting to get some traction."

Shares of Netflix were recently down $1.82, or 7.6%, to $22.14. Shares of Blockbuster were up 2 cents to $6.48.

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