Blockbuster raises its online rental rates

Essentially ceding its battle for subscribers to Netflix, the company said it planned to raise rates as much as 40 percent.

While it had been performing adequately by some estimates for at least a few years against its larger competitor in the online movie rental space, storefront giant Blockbuster has fallen onto hard times financially, recently overhauling its leadership.

The company even made the unusual move of ending its practice of reporting online subscribers once it began losing them: a sign that the company was no longer interested in the cat-and-mouse game with Netflix.

Blockbuster Online has about 3.1 million subscribers, while Netflix has over 7 million. It was not immediately clear how many of Blockbuster's subscribers would be affected.

Rates for Blockbuster's various plans are due to rise from $2 to as much as $10. Its most popular plan, which allows customers to rent up to three movies at any one time and exchange up to five movies per month in-store, will rise from $17.99 to $19.99.

The top plan, which also allows for three movies out as well, but unlimited in-store exchanges, would go up 40% from $24.99 to $34.99 per month. There was one drop in price: Blockbuster's basic plan, which allows one movie out but no in-store exchange, will drop from $4.99 to $3.99.

All the changes seem to be aimed at ensuring that Blockbuster doesn't lose money on its service. While the company wants to keep as many customers as possible, it also wants to insure a fair return for itself.