While there were rumors that Blockbuster might drop out of the online DVD rental game, it appears their interim strategy is just to raise prices to match Netflix. Since Wal-Mart decided to hand over their online rentals to Netflix, the battle in the US has become a two horse race. Of course, Wired News has dug up the old story that Amazon is going to enter the online DVD rental market -- something that has been rumored for nearly a year. It's still not clear if Amazon really will do this, or if they'll end up partnering with someone else instead. In the meantime, though, with Blockbuster now matching Netflix on price, it seems the price war aspect of this may have gone away for the time being, and the two companies can compete on service and selection. Both have some advantages they can play up. Blockbuster can focus on their local stores with bundled offerings, while Netflix can play up their selection, community and recommendations engine.
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