For the first time, Netflix has reported a quarterly drop in subscriptions, and has issued warning on subscriber numbers, revenue and profit for the year in theface of stiff competition from Blockbuster. Blockbuster has already said it will spend $170 to push its Total Access program, under which customers can rent DVDs online and swap or return them at a Blockbuster store. In response, Netflix has cut apair of its subscription plans, to $8.99 and $16.99 respectively, to compete directly. It had previously cut two other plans by $1 each. Netflix was the trailblazer of online DVD rentals, andhas actually still beaten projections from Wall Street, earning 31 cents per share, compared with the Wall Street target of 25 cents. Net income for the quarter was $25.6 million. ChiefFinancial Officer Barry McCarthy was pessimistic about the immediate financial picture. “When Blockbuster decides to operate its online business profitably, our financial results willimprove also, but until that time both subscriber growth and earnings will remain under pressure.”
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