Netflix Inc

Amazon.com Inc. makes its money as an online retailer. So why would it want a company that rents DVDs? Officially, it doesn't -- or at least it isn't talking about it. But an Amazon purchase of DVD rental king Netflix Inc. has been the subject of on-again, off-again rumors on Wall Street, and that speculation Monday sent Netflix shares up 7%. Although neither company would comment on the speculation, some analysts think it isn't that far-fetched.

Netflix flexed its muscle Monday, saying it would raise prices about 20% for subscribers who rent Blu-ray movie discs. The movie service said the higher rates would allow it to stock more copies of the high-definition discs to keep pace with demand. The rate change, which takes effect April 27, will add $4 to the $17 monthly fee paid by subscribers who rent three movies at a time. Customers who rent standard DVDs will not be affected.

Wal-Mart Stores Inc. and Netflix Inc. were accused of conspiring to create a monopoly for online video rentals in a consumer lawsuit alleging that the collusion drove up prices. The two companies agreed in 2005 that Wal-Mart, the world's largest retailer, would close its online rental business and refer customers to Netflix, which would promote Wal-Mart's DVD movie sales, according to the lawsuit filed in federal court in San Francisco.

Apparently it's better to rent than to own DVDs during a recession. While movie studios are reeling from plunging DVD sales, which were down 13.5% in the first half of the year, DVD-by-mail subscription company Netflix Inc. saw its revenue surge 21% to $408.5 million in the second quarter that ended June 30. Net income was $32.4 million, up 22% from the same period a year ago.

Netflix, seeking not to be bypassed in the transition to digital distribution of movies, removed limits on how many films and TV shows subscribers can watch over the Internet. The move comes as Apple Inc. is set to unveil plans for users to rent major Hollywood movies online through its iTunes Store. Netflix, which pioneered the online movie rental business in 1997, had capped the number of hours available to its 7 million subscribers based on the price of their monthly plan.

Netflix Inc.'s DVD queue just got longer -- much longer. The DVD rental service is suffering through its biggest-ever shipping problem. Netflix on Thursday said "severe technical issues" had prevented it from shipping the awaited TV shows and movies to about 2.8 million subscribers, or one-third of its members. Analysts say the Los Gatos, Calif.-based company has built up such a loyal following that few of its subscribers are likely to abandon it if the problem doesn't linger for too long.

Netflix Inc. has fixed a major snag that had prevented it from shipping millions of DVDs to its subscribers this week. Some of the customers affected by the delay might get their movies and TV shows in time for Saturday-night viewing. "We're now shipping from all of our distribution centers, with full expectation that everybody's discs will go out today," company spokesman Steve Swasey said Friday. "All systems go."

Netflix Inc. continues to expand the reach of its "Watch Instantly" video streaming service, striking a deal to make its movie and TV shows available to about 1 million TiVo owners who have high-speed Internet connections. The partnership represents a bit of back to the future for Netflix and TiVo Inc. They originally announced a video-on-demand deal in fall 2004. That earlier agreement unraveled because of a combination of technology and rights issues.

Netflix Inc. will start showing movies and TV episodes over the Internet this week, providing its subscribers with more instant gratification as the DVD-by-mail service prepares for a looming technology shift threatening its survival. The Los Gatos, Calif.-based company plans to unveil the new "Watch Now" feature today, but only a small number of its more than 6 million subscribers will be given immediate access to the service, which is being offered at no additional charge.

Netflix Inc. has cut the price for its lowest-priced online DVD rental plan by $1 per month to $4.99 in response to "an ever-evolving and competitive market," a company spokesman said Monday. The entry-level plan allows subscribers to rent one DVD at a time with a limit of two DVDs per month. Prices for the Los Gatos, Calif.-based company's most popular three-at-a-time plan remained unchanged. The price cut comes about two months after rival Blockbuster Inc.