"Netflix Chief Executive Reed Hastings told Reuters on Monday he had expected Blockbuster to do something 'drastic' because the stakes in the growing industry were so high. 'I think it's important for them to get a toehold in this market,' Hastings said. 'We are the leader with 2.2 million subscribers and they waited five years to enter it so they have to play catch up.'
Hastings said the lower prices would expand the market of online subscribers and steal market share from traditional retail rental stores. 'The important aspect of that is the video stores in America will be vacant,' Hastings said. 'We are going to see a complete shift of the video service to go online. Blockbuster is recognizing that online rentals are a better way to go.' Hastings said the coming year would be dominated by a 'land grab' between Netflix and Blockbuster as the companies race to reach 5 million subscribers. That number represents the 5 percent of U.S. households that own a video recorder or DVD player. That 'critical mass' would position the industry leader to dominate a market set to grow from $500 million in sales to 'a few billion,' he said."
"We think and Blockbuster thinks that online movie rentals will be bigger than online book rentals. It may be one of largest online markets ever," Hastings said. "Maybe we'll both be winners with 5 million subscribers, and the only losers are store-based rentals."