No they did it in response to rumors that  Amazon.com was going to start one up.

If you use Netflix then you need to check this web site out.
hackingnetflix.com/

New Blockbuster Subscription Pricing
Blockbuster sent me an e-mail with their new prices today. Here's how they compare:

Blockbuster 3-at-a-time unlimited $17.49 ($17.99 Netflix)
Blockbuster 5-at-a-time unlimited $27.49 ($29.99 Netflix)
Blockbuster 8-at-a-time unlimited $37.49 ($47.99 Netflix)

Netflix offers one additional plan that Blockbuster does not offer: 2-at-a-time, 4 rentals per month for $11.99 per month.

I still believe Netflix is the right choice since they have a better recommendation and ratings system, three times as many distribution centers, and more movies available for rental at this time.

It was not only in respose to Amazon, it is also a response to Blockbusters pricing and Walmarts on-line rental service.

A Netflix Odyssey Thinks a Price War with Walmart is Suicide
A Netflix Odyssey (a great Netflix blog) thinks that Netflix is making a mistake by entering a price war with Walmart:

I'm afraid that's what will happen to Netflix here... they just priced themselves below the most famous and powerful discounter in the world. Wal-Mart is in the business of low prices... not high quality and exceptional service. Netflix had recently raised their prices by 10% to maintain and improve quality of service. Now just months later, they're reversing the decision and dropping 10% below the pre-price hike rates.

He makes a good point, but Netflix has to worry about Blockbuster and maybe even Amazon, too. The story of Netflix and how they competed with 3 huge companies at the same time will will be something discussed in MBA classes for years.

Again, if you use Netflix then you need to check out this site:
hackingnetflix.com/

Quoted: No they did it in response to rumors that  Amazon.com was going to start one up.

Blockbuster says that 70% of their customers are former Netflix subscribers.
Netflix says that they are losing customers.

Hmmmm.......

Quoted: Quoted: No they did it in response to rumors that  Amazon.com was going to start one up. Last I heard, netflix had over 1.2M subscribers.  The price drop to $17.99 is around 5 bucks. That is a minimum of $5M in revenue that they are throwing away per month and in all reality that number I'm sure is much much greater. Companies don't throw away that kind of money on rumors. They are currently losing subscribers and they have lowered their price to compete with Blockbuster which also offers the service for around $18.