Netflix Cuts Price as Amazon Moves In

October 16, 2004
Netflix stocks went into a tailspin on rumors that Amazon.com plans to enter the DVD rental market. Netflix announced it was reducing its monthly subscription fee from $21.99 a month to $17.99 in anticipation of Amazon's move.

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Blockbuster followed suit, saying it would reduce its online monthly DVD rental fee from $19.99 to $17.99. Wal-Mart is also a big player in the online DVD rental business; it did not announce any immediate changes.

Netflix pioneered the notion of a monthly subscription fee that allows a subscriber to have two DVDs checked out at any given time. But many business analysts say the jury's out on whether the company can survive a challenge from Amazon.com.

Netflix' stock plunged 43 percent from $10.45 to $6.98 after it announced it was slashing its subscription fee.

Amazon.com has had no comment on the reports that it's about to plunge into DVD rentals.

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