Netflix Takes Another Blockbuster Bruising

Unlike Blockbuster's so-called Total Access plan, which is $17.99 a month, the Blockbuster By Mail plan doesn't allow subscribers to exchange DVDs in stores for new ones.

"While we believe Blockbuster Total Access offers the best value in the marketplace, we recognize that some consumers may not live near a store or aren't interested in taking advantage of the free in-store rentals they can get through [that plan]," said Blockbuster in a press release. "If this group is considering an online service or already subscribes to an online service, we're now giving them another reason to choose Blockbuster over [Netflix]."

Blockbuster also rolled out a cheaper Blockbuster By Mail plan priced at $4.99 a month, matching the lowest-priced Netflix offering.

Blockbuster couldn't be reached to discuss the financial impact of its new plans. The company recorded widening losses in its latest quarter due to a weak market for in-store movie rentals and runaway promotional spending on its Total Access plan. Meanwhile, it reported 800,000 net new subscribers for the quarter, compared with the 481,000 reported by Netflix, signaling that it's gaining momentum on a market share basis.

Netflix, which has already slashed its outlook for the year because of the ongoing competition, also did not respond to inquiries for this story.

Olson says Blockbuster's latest move could increase the level of subscribers that opt out of service at Netflix, which will eventually hurt the company's sales and earnings.