Blockbuster Loses Latest Battle

It also said it plans to report total membership numbers in the future, rather than just its online subscriber count. Blockbuster noted that it had 20 million customers around the world during the quarter, counting its business at its massive store base.

Sterne, Agee & Leach analyst Arvind Bhatia says Blockbuster is shifting the focus away from its online service because the industry suffered its first quarterly decline in subscribers in recent memory -- a sign that growth in online DVD rental may be at its peak and facing a slowdown.

"Blockbuster is going to be improving the profitability of its business rather than focusing on online subscriber growth," says Bhatia. "That's a good thing."

Shares of Blockbuster were recently down 20 cents, or 3.8%, to $5.06. Netflix shares were down 24 cents, or 0.9%, to $26.23.