December 15, 2004

...AND CHEAPER...:

Blockbuster drops late fees to compete with cable, Web (DAVID KOENIG, December 15, 2004, Chicago Sun-Times)

"We had to deal with late fees," said Chairman and Chief Executive John Antioco. "It's the source of jokes on late-night TV. It's still anecdotally, and in some sense really, the biggest negative to Blockbuster ... There were customer transactions that never happened because of late fees." [...]

Blockbuster faces new competition on several fronts -- cheap DVDs in discount stores, mail-delivery service from Netflix, and movies on demand from cable TV operators -- none of which come with late fees. Dallas-based Blockbuster said it tested dropping late fees in several cities over the past year and found that retail sales of movies increased.


Nothing costs more tomorrow than today anymore.

Posted by Orrin Judd at December 15, 2004 10:38 AM
Comments

Not surprising that your retail sales go up when you 'sell' people something they didn't intend to buy.

I'm not saying that rental outfits shouldn't recover the costs of product that walks out the door never to return but it's pretty obvious 'no more late fees' is just spin.

Posted by: Chris B at December 15, 2004 11:06 AM

Nothing costs more tomorrow than today anymore

Except for college tuition.

Posted by: Brandon at December 15, 2004 11:43 AM

To Chris' point BlockBuster must have come up with another method to discourage people taking out videos and not returning them for a week or so or at all. Perhaps the estimated cost of non-returns was added to the rental price or the period at which they simply bill you for a lost video was shortened.

In any event, the demise of BlockBuster has been predicted for years as technology allows people to order movies on demand via cable. So this could just be the death throws of BlockBuster.

Posted by: AWW at December 15, 2004 11:55 AM

Brandon:

Doesn't cost consumers any more than it did though--government drives the official price tag.

Posted by: oj at December 15, 2004 12:02 PM

I believe Blockbuster is switching to a Netflix-style model-- consumers paying a monthly cost for the privilege of loaning out a certain number of movies simultaneously.

Posted by: John Thacker at December 15, 2004 1:41 PM

Isn't competition wonderful?

Posted by: jd watson at December 15, 2004 2:32 PM

John:

Their distribution sucks.

I know a number of people who signed up for that yet got frustrated by the week-long turnaround for DVD mailings.

Employees pretty much admit it's just a spoiler tactic to take business away from Netflix rather than something Blockbuster is committed to.

Posted by: Ali Choudhury at December 15, 2004 3:54 PM

People want the convenience to rent a movie and return it only when their schedule allows them too. Hollywood Video has had a 5 day return policy for years that was much more convenient than Blockbuster's.

Video/DVD rentals are a declining industry anyway as technology will make then obsolete at some point. Hollywood Video is already branching out to other rental services.

Posted by: Chris Durnell at December 15, 2004 4:29 PM

Nothing costs more tomorrow than today anymore

Except for college tuition.

and oil..
and houses...
and food...
and steel...
and copper...
and silver...
and healthcare...
and gold...


Posted by: Robert Duquette at December 15, 2004 5:36 PM

What's most obvious about your choices is that they are the products whose markets are made most irrational by government intervention, but even then their prices are falling. No medical procedure, for instance, costs more tomorrow than today--we just buy more of them for people.

Posted by: oj at December 15, 2004 5:54 PM

Blockbuster was also driven by the transition from Tape to DVD. Tapes were priced high to the stores and the consumers (as much as $70) which encouraged the rental late fee model. DVDs are priced much lower to the stores and to the consumers.

Posted by: Robert Schwartz at December 16, 2004 11:00 AM
« TO THE SHORES OF TRIPOLI: | Main | "IT" GUY (via Kevin Whited: »