If that headline's an exaggeration today, judging by the way things are going, it may not be for long. In the third salvo in what is shaping up to be a grand digital pricing contest (I'd call it something less printable, but this is a family publication), movie-hawker Blockbuster (NYSE: BBI) took less than 24 hours to undercut DVD-by-mail first-mover Netflix's (Nasdaq: NFLX) price cut.
On Thursday, Netflix announced that it would drop its $21.99 basic subscription rate to $17.99 in an effort to stave off inroads into its market share by competitors Blockbuster and Wal-Mart (NYSE: WMT) and to scare off expected competitor Amazon.com (Nasdaq: AMZN).
Friday, Blockbuster responded in kind, announcing it would drop its own price to $17.49. Not exactly an original idea, but touché anyway. I want to hand it to Fool board member "Newsman," who immediately observed with a wink that Wal-Mart, with its $18.76 plan, "is now the premium-priced option."
This illustrates perfectly the absurdity of the situation. Within a span of 48 hours, during which time Netflix announced record profits in large part because of its ability to implement and retain customers with a $21.99 plan, the cost of renting an endless supply of movies has dropped 20%. And why? Because two out of four actual or potential big players are fighting for market share in a market that has achieved about 3% total penetration.
Market Data 
Markets 
AI
