Blockbuster Inc., which has been losing money on online movie orders, is boosting prices of its DVD-by-mail service for new customers and some existing ones by up to 40 percent.

The movie-rental giant began notifying customers of the increases — and some price cuts — early Thursday. The hikes of $2 to $10 will take effect next week and caused an instant buzz on World Wide Web boards.

The instant beneficiary of the move was rival Netflix Inc. — its shares jumped more than 9 percent. Blockbuster shares barely budged.

Blockbuster declined to say how many of its 3.1 million online subscribers are facing rate increases.

Spokeswoman Karen Raskopf plus declined to reveal which current customers will see price hikes other than saying, “We are taking into detail the profitability of individual subscribers.”

Blockbuster lost half a million online customers in the July-September quarter. Chief Executive James W. Keyes said last month that many of those subscribers were costing his company

more than they were worth.

The company spent heavily to advertise the online service, and it lost money when customers took their movies back to stores for free exchanges.

While Blockbuster was losing online customers by the summer — and said it would stop reporting the number of subscribers — Netflix cut prices and added 286,000 subscribers, pushing it by the 7-million mark.

Netflix pioneered the online ordering and mail delivery of rental movies in 1999. Blockbuster followed in 2004, and cut into Netflix’s lead during late 2006 and early 2007.

Blockbuster offers several plans for subscribers who order movies online and receive them in the mail. The most popular plan lets customers keep three DVDs at any duration and exchange up to five DVDs per month at a local Blockbuster store for a free rental.

That plan will rise from $17.99 to $19.99 per month for new customers and some…

Orginal post by Top Tech News