A revised price structure will allow the rental of one DVD at a time for a monthly fee of £7.97 via Tesco.com, undercutting the £7.99 a month charged by Amazon.
The offer is more limited than its existing £13.97 offer for three DVDs at once, but Tesco.com director of non-food John Paul O'Reilly said it aimed to encourage trial.
The service, which is handled through Video Island, has 10,000 subscribers. It has a 10% market share, behind Blockbuster and ScreenSelect, according to O'Reilly.
Tesco is trialling TV, radio and press ads in the Anglia region to promote the offering, with the potential for a national roll-out in 2005.
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