Los Gatos, Calif. - Online DVD rental service Netflix announced that it will lower the prices of its two most-popular subscription plans by $1, in part to counter price cuts at the online service of rival Blockbuster.

The company's $9.99 monthly plan is being reduced to $8.99, while a $17.99 plan that allows three DVDs out at a time will be reduced to $16.99 per month.

Netflix already lowered the cost of its $5.99 and $14.99 per month plans by $1 in February and June, respectively.

Along with its subscription prices, Los Gatos, Calif.-based Netflix also lowered its earnings outlook for the second half of the year, largely due to costs associated with the price cuts.

The company said that it earned $26.6 million in the second quarter, a 50% increase from the same period a year ago. Earnings were boosted by a $4.1 million patent infringement lawsuit settlement payment from Blockbuster.

Netflix now expects 2007 profits of $42.4 million to $52.4 million, down from an earlier projection of $55 million to $60 million.

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http://biz.yahoo.com/ap/070723/earns_netflix.html?.v=1 (AP)

http://www.netflix.com