Blockbuster - No more late fees!

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Swat's picture
Location: Vancouver

Looks like that business model is losing out to the influx of cheap DVD's and DVD+RW media

Blockbuster to End Late Fees in 2005
Tuesday, December 14, 2004

DALLAS "” Blockbuster Inc. (search), the nation's biggest movie rental company, plans to eliminate late fees on games and movies as of Jan. 1.

Blockbuster announced Tuesday it will continue to set due dates, with one week for games and two days or one week for movies. But the company will give customers a one-week grace period at no additional charge, starting on New Year's Day.

Renters who want to keep movies or games longer can buy the products, less the rental fee. Or, Blockbuster says customers can return products within 30 days for credit to their accounts, with a restocking fee.

"Doing away with late fees is the biggest and most important customer benefit we've ever offered in our company's history," John Antioco (search), Blockbuster Inc. chairman and chief executive, said in a prepared statement. "So as of the first of the year, if our customers need an extra day or two with their movies and games, they can take it."

Officials of the Dallas-based company also said Tuesday they expect continued softness in the rental industry and flat operating income in 2005 compared with this year before the estimated $50 million costs of marketing and implementing the late-fee elimination policy.

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Warlock's picture
Location: Kalamazoo, MI

Plus, the class action lawsuit a while back about the whole ""take an extra day, but have it back by noon"" thing probably didn''t help.

And, oh yeah... Netflix.

Cool though. Kind of makes me want to start renting from Blockbuster again.

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karmajay's picture
Location: St. Pete, Florida

/agreed

Netflix definitely caused this!

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Minase's picture
Location: Seattle, WA

This is one of the most diabolical schemes that I''ve seen yet - no real surprise coming from Blockbuster. Rather than a ''no late fee'' policy, this effectively puts the return time at 1 month or they charge you $20 or so for the movie or even more for a game. Devious, yes, but did you guys notice the ''restocking fee'' associated with returning a movie? I bet it just happens to be the average amount that Blockbuster took in from a late fee.

I disagree that Netflix was the driving factor behind this. Remember that Blockbuster is also trying to smite the retail competition by aquiring their #2 competitor, Hollywood Video. With that much of the retail video market, they can sit back and rake in the cash from an established revenue stream, while Netflix dies from increased competiton from Amazon, Wal-Mart and, of course, Blockbuster - who can see that so much competition will eventually squeeze out most of the profits from the mail-order sector.

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Speaking of Netflix... does anyone here use it, and how long does it take you to receive a new movie after putting the old one in the mail?

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"Swat wrote:
Looks like that business model is losing out to the influx of cheap DVD''s and DVD+RW media

I think it''s less nefarious than that. I think it''s far more the ever-expanding distribution (and cheapening cost) of home DVDs.

I remember years ago with VHS, stores simply didn''t carry the kind of stock they do now in DVD. Stuff comes out on DVD much faster than it ever did before on VHS. The selection of movies from a store like Target now dwarfs what they used to carry years ago. This is especially true in smaller towns. In my old town of 30,000, it used to be that we could barely get a home video of anything except a select few movies. Now, Target and Wal-Mart carry a crap-load. Same sort of thing with games. Getting a copy of Baseball Stars for the NES was a herculean effort to track down a used copy. Now, it would be in Target''s glass case a couple days after release.

I think the expanse in selection, the swiftness in which ""new"" movies hit home DVD, and the price, leads people to just buy movies far more often than rent them.

The other big thing is the on-demand pay-per-view movies of satellite and digital cable.

There''s a lot more to it than piracy, I think.

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Swat's picture
Location: Vancouver

I didn''t just mean piracy, I meant the cheap price of DVD''s in general. Like all those 3 for $10 deals etc.. DVD''s are so disposable now, dropping $4+ on a rental seems silly..

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Paladin's picture
Location: Sacramento, CA

"buzzvang wrote:
Speaking of Netflix... does anyone here use it, and how long does it take you to receive a new movie after putting the old one in the mail?

I use netflix, and it really seems to depend. We''re on the ""3 at a time"" plan, and try to keep a steady stream of stuff coming in and out by staggering mailings. Some days we can mail a disc on a Monday, and have the replacement by Thursday. On rare occasions even a Wednesday. Yet other times we''ll mail a disc and not get the replacement for over a week. I''m not sure if netflix or the post office is to blame.

Regardless, for $18/month we easily get 12-16 discs a month. Seems well worth the price to me.

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Quote:

Speaking of Netflix... does anyone here use it, and how long does it take you to receive a new movie after putting the old one in the mail?

I love my Netflix. I tend to get TV shows and foreign films, which aren''t really stocked well in my local Blockbuster.

This is how it works for me. I go onto Netflix''s site and choose a bunch of DVDs I want. Then I go to the Queue. I then set the priority for each DVD in this queue. It is a pretty straightforward interface.
When it comes time to send the DVDs they look at your queue and see if they have a copy in. I have yet to have a DVD not be in, but I don''t tend to rent the big new movies so I have no idea if this is common for other users.

They then send you 3 discs, which is the maximum you can have out at once. Each movie is sent in a seperate package which acts as a return envelope. For me, if they send a DVD on a Monday I get it on Wednesday. You can watch the movie for as long as you want, but if your like me you tend to burn through them in a night or two.

You then send the movie back in the return envelope. The site tends to get it back in two days. They then take a day for processing and usually the following day they send out the next disc on your queue. You can reorder your queue at anytime, in case you decide you want something newer. They aren''t open Saturdays and Sundays, so timing can be an issue.

When I''m burning through them fast I''ve gotten 12 discs watched in a month, but I average 9. I pay $18 a month.

There is a lot of stuff on there I didn''t know existed and its nice to be able to just type in a search to find movies. I''m a Netflix fanboi at this point.

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"BobRoberts wrote:
I''m a Netflix fanboi at this point.

Seconded. Like TiVo, life without Netflix seems archaic in comparison. Limited selection? Late fees? Having to get in the car and tromp 5 miles up the road to get a movie? Madness!

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Warlock's picture
Location: Kalamazoo, MI

One thing I really wish Netflix did would be to NOT charge me the months I don''t rent anything. Like, at the beginning of the month, Netflix says ""Hey, guy, gonna rent this month?"" and if it''s a busy month, I''ll just go ""NOPE!"" and boom, no $20 fee. Because while this would be good for those months where I''m actively watching rented movies, there would be times where I just don''t feel like renting anything.

Though this WOULD be nice for those TV shows (HBO, Showtime) that I''ve been meaning to watch, but can''t afford to pay $80+ for (Dead Like Me, Six Feet Under, Deadwood, The Wire, etc).

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Netflix is great, but I just don''t watch enough movies. I had it for about a year but then was paying $20 a month to watch 2-3 movies, just not worth it. Plus I like to buy my movies.

I have not rented at Blockbuster for at least two years, like someone else said, when you can BUY the movie for $15 or even less, why rent it for two days for $4.50? The only thing I have considered renting is games, bceause that $5 vs $50 to buy is a lot more reasonable. In a couple of places I''ve lived independent video rental places have gotten a ton of my business with $1.99 deals or .99 Tuesdays.

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Location: New York, NY

I''ve been using Netflix since their first day in business. 3-at-a-time is a terrific value.

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buzzvang's picture
Location: Korean Animation Studio!

Heh, it usually takes 7 business days for me to turn over a rental with Netflix. Either the post office down here hasn''t upgraded their ponies in a while, or Netflix doesn''t have a distribution center in or around the Deep South. That''s really been the biggest stickler to me; We don''t always have our next 3 selections each weekend. On those days, Blockbuster looks like a great alternative. What''s been nice though is Netflix''s reccomendations, because I''ve managed to catch up on a ton of movies I''d forgotten about.

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"*Legion* wrote:
I think it''s less nefarious than that. I think it''s far more the ever-expanding distribution (and cheapening cost) of home DVDs.

I remember years ago with VHS, stores simply didn''t carry the kind of stock they do now in DVD. Stuff comes out on DVD much faster than it ever did before on VHS.

That''s because the Blockbuster-backed Rental Window is now a thing of the past. Blockbuster tried to enforce the same thing with DVDs but studios already had a taste of the great pay-off that quickly released DVD titles made and told Blockbuster to go strongarm themselves.

Blockbuster can die a festering, painful death!

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Sku Boi's picture

I woek at blockbuster and had a 3 hour meeting on this. There is so much fine print that it makes me scared....

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Edwin's picture
Location: Miami, FL

Could you scan me a copy of that fine print?

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Warlock's picture
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Inquiring minds want to know!

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Sku Boi's picture

wish I could...they wouldnt let us take home anything.

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Edwin's picture
Location: Miami, FL

Cell phone cam? Fax machine? scanner? write it?

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Sku Boi's picture

I''ll try, but I dont know how to get my hands on it...

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Mayfield's picture
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No more late fees = the death bell ringing for Blockbuster.. where do you think they get all their profit margins?

When VCR tapes were retailing at $80 renting was a viable business. Now when the DVD goes on sale for $15 why bother renting?? Hollywood killed the rental off

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Vector's picture
Location: The Wet Coast

I still rent and my family still rents all of the time. We barely ever go to Blockbuster and don''t even have a Hollywood video in my town. We just go to the local privately owned store and rent whatever they have their, which is normally the same as Blockbuster.

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Alien13z's picture
Location: Minneapolis

I live right in Minneapolis and can mail out a disc on Monday and have a new one on Wednesday. Yes, that''s right, I RULE!!!!!!!!11

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