Blockbuster (BBI) reported a loss that narrowly beat analyst expectations in the wake of slowed consumer spending.

“We are pleased with our third quarter results, particularly in light of the unusually limited slate of movie titles and strong viewership of the Olympics during the period. Key initiatives around merchandise assortment, in-stock availability and expense reduction allowed us to deliver our third consecutive quarter of positive domestic same-store sales and reduce our net loss by over 48%," said Jim Keyes, Blockbuster Chairman and CEO

The company reported a loss of $17.8 million, or 11 cents per share. This is a 48.3% improvement over the $34.4 million loss reported in the third quarter of last year. Analysts, according to Thomson Reuters data, were expecting a loss of 16 cents per share.

The company also reported sales of $1.20 billion, a decrease of 2.7% from $1.24 billion last year. Analysts were expecting $1.27 billion.

The company’s losses were cushioned by a 35.1% increase in domestic merchandise sales, particularly with video games. Merchandise sales were reported at $127.5 million, compared to $94.4 million in the same quarter of last year.

Rental revenue, however, was $680 million, down from $734.2 million last year.

According to a Reuters report, Blockbuster is testing new pricing for its rental offerings in its stores, including a subscription plan that would allow customers to rent as many movies as they wanted each month.

Competing rental services have popped up over the last few years -- such as Netflix (NFLX), which recently announced the ability to stream movies and TV shows directly to TiVo (TIVO).

Blockbuster has expanded its own operations into the digital realm by acquiring Movielink.com and integrating it into its own site.

This service lets customers download movies for rental or purchase directly on their computers.

Blockbuster Spokesman Randy Hargrove recently told FOXBusiness.com that the company has an advantage over the rent-by-mail services because it is “the only company that offers the ability to rent in-store or by mail and through Blockbuster Total Access, customers have the ability to exchange their by-mail movies in-store for free movie rentals and discounted game rentals.”