Smarter Pricing: How to capture more value in your market

8. Fighting price wars – planning to escape pain

case study 8.1: Spiralling down to the bottom – price war tactics in practice with Netflix In 1999, Netflix launched an on-line DVD rental proposition in the USA, offering an alternative business model to video rental shops such as Blockbuster Video. Netflix invited customers to browse on-line from a larger selection. Funded through a monthly membership fee, borrowers could order and receive by post their chosen film. Where rental stores limit customers to a certain number of days and penalize late returns, Netflix allow unlimited borrowing time. The incentive to return a film is simply to be able to borrow the next film on the list. At this point the most popular package from Netflix was the ...