As our own Rick Munarriz reported earlier today, Netflix (NASDAQ:NFLX) announced its third-quarter earnings last night.

The big news, though, was that the DVD-by-mail rental company stunned the market when it said it would lower its subscription rates next month in response to oncoming competition from uber-ecommerce firm (NASDAQ:AMZN) and its existing competition. Netflix has been contending for a while now with the entry of Wal-Mart (NYSE:WMT) and Blockbuster (NYSE:BBI) into its innovative market space, but it appears the fight for your rental dollars is heating up.

Investors weren't kind today and punished Netflix shares by nearly 41%. The stock closed at $10.30, a new 52-week low. That's substantially off the firm's $39.77 52-week high.

Netflix CEO Reed Hastings talked to our Motley Fool Radio Team today and answered our questions about the competition, about the firm's decision to lower subscription rates, and about the stock's price decline in trading today.

When David Gardner asked Hastings about what was behind his company's stock price drop today, Hastings responded, "Large markets that are growing very fast and are profitable attract competition. We reported $142 million in revenue -- up 96% on a year-over-year basis -- so we have a very rare phenomenon here -- a $500 million market that is doubling every year. Eventually that attracts the attention of Wal-Mart, Blockbuster, and Amazon. And we announced that we believe Amazon is going to enter this market in the next few quarters."

To hear the rest of our interview with Reed Hastings, and to find out his thoughts on Netflix's future and how it intends to battle its competition, tune in this weekend to hear the entire interview on our Motley Fool Radio Show on NPR. You can find out which station near you carries the interview, or you can listen to it online.