Wal-Mart pressures Netflix in DVD price war

Wal-Mart has struck the latest blow in a burgeoning DVD price war, putting new pressure on online movie rent-by-mail pioneer Netflix, reports CNET News.com.

The retail giant has cut the price of its DVD standard plan by 7.5 percent, from $18.76 a month to $17.36. The reduction trumps recent price cuts from Netflix and Blockbuster, which now offer similar plans for $17.99 and $17.49, respectively.

In October, Netflix cut $4 off its flagship monthly plan, which entitles subscribers to unlimited rentals, with three movies out at any time. The company had raised its prices to $21.99 just six months earlier, and had counted on the extra revenue to help compensate for rising costs.

The plunging price tags and new competition from Blockbuster and Wal-Mart are putting pressure on online movie rent-by-mail pioneer Netflix. Unless significant cost savings can be found elsewhere in the business, Netflix could be dangerously close to losing money on many subscribers.

Even the giants could soon be facing sharper competition from local retail outlets, in the form of kiosks offering 99-cent-a-day DVD rentals. Tiny DVD Station, with just 20 employees, has kiosks in about 14 retail outlets so far, including Sony’s Metreon retail location in San Francisco. Another kiosk maker, Los Gatos, CA-based DVDPlay, is testing 99-cent DVD rentals in partnership with McDonald’s.

DVD Station offers retailers everything they need to set up DVD rental service within their stores, with up to 25,000 titles. The DVDPlay kiosks stack from 100 to 350 movie titles in a vending machine, offering mostly new releases.

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