If you've been following the movie rental industry lately, you are well aware of the price war emerging between Blockbuster (NYSE: BBI) and Netflix (NASDAQ: NFLX). It should come as no surprise that Netflix disappointed Wall Street after the bell today.

Although Netflix reported higher net profits for the quarter, the company lost subscribers for the first time in the company's history. Its expectations for the future also terribly disappointed investors. The company said it expects to finish the year with between 6.8 million and 7.3 million subscribers vs. previous expectations of 7.3 million to 7.8 million. Netflix also cut its expectations for revenues and net income.

This disappointing earnings report comes on the heels of the company announcing price cuts to compete with Blockbuster's rental service. The price cuts alone managed to send the stock down 12% on the day, then the earnings announcement after the bell sent the stock down another 5%.

If you're an investor, I'd strongly advise against jumping into this sector. Naturally, companies engaged in a price war are destroying one another's margins, revenues, and the like -- factors that aren't attractive to owners. However, trading opportunities could evolve in the sector depending on expectations. For example, I know several smart traders betting on a second half rally in Blockbuster because they think the analysts' expectations are low for late this year into next year as a result of a weak second quarter.