• The Los Angeles Times, Thursday, April 19, 2007 10:45 AM

Blockbuster, which has struggled for years to find its niche online, is finally seeing a turnaround in its business. And in announcing its disappointing quarterly earnings yesterday, Netflix admitted that Blockbuster's cutthroat competition was slowing its growth.

Netflix founder Reed Hastings acknowledges that the fight for new subscribers has intensified, with some preferring the variety of options provided by Blockbuster, which supplements its retail network with an online business. But he maintained that Blockbuster's approach is a money loser that cannot be sustained.

Both Netflix and Blockbuster offer online services for $17.99 a month. But late last year, Dallas-based Blockbuster began offering its online subscribers the option to return and check out some DVDs in its stores at no additional cost. Netflix has seen some subscribers defect because all its DVD deliveries are made through the mail.

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