Blockbuster Testing $18 Monthly Fee

Blockbuster Inc. (BBI) Wednesday said it has begun advertising a test fee of about $18 for unlimited monthly DVD rentals, potentially reversing an earlier bid to undercut rival Netflix Inc. (NFLX) on price.

The test started Monday and does not necessarily mean the top U.S. movie rental chain plans to adopt the new price, Blockbuster spokeswoman Jeri Anne Thomas said.

"We are a retail company, we test a lot of things," Thomas said. "We are testing $17.99, that is one of several tests."

Blockbuster, which recently gave up lucrative late return fees to woo customers, has been locked in a costly price war with top online DVD renter Netflix since late last year.

Dallas-based Blockbuster has been trying to garner more subscribers for its online rental service, launched in August. In December, it cut its subscription price to as low as $14.99, its current fee, which allows customers to take out three DVDs at a time.

Previously Blockbuster had charged as much as $19.99 but brought that fee down to $17.49 on Oct. 15, egged on by Netflix, whose comparable fee is currently $17.99 compared with $21.99, which it charged previously.

According to Thomas, Blockbuster customers who respond are informed that the Internet ads are part of a test, and are charged only $14.99.

The new price, if adopted, would bring Blockbuster's fees in line with those of Netflix but not as close to those of Wal-Mart Stores Inc. (WMT), whose low-cost online rental plan costs $12.97 but allows customers to take out only two DVD at a time.

At Netflix customers currently pay $14.99 a month for a two-at-a-time unlimited DVD rental subscription.

Netflix, which pioneered online DVD rental, dominates the market with more than 3 million subscribers, compared to Blockbuster's 750,000.

Blockbuster shares were down 11 cents to $9.80 on the New York Stock Exchange (search). Blockbuster has traded between $6.50 and $16.15 in the past year.

Shares of Netflix were up 95 cents, or 7 percent, at $15.43 on the Nasdaq. Over the past year, Netflix shares have traded between $8.91 and $36.57.