Blockbuster's Latest Concession.

For those who still rent DVDs from baked clay and plaster stores,
Blockbuster's latest concession might be of interest. In its glory days,
Blockbuster became a DVD rental leech and was able to extort over $300
million in annual gross revenue from its late fees. When Blockbuster
customers complained on this newsgroup, they were advised to shop
elsewhere. Apparently, many Blockbuster customers have taken this
excellent advice.

For many years, Blockbuster was able to gouge its customers with
exorbitant "extended viewing fees." These late fees were not calculated
on a daily rate, so a DVD that was only 1 hour late would not be
prorated (as was done originally) but charged a late fee equal to the
original rental price. This meant that a $4, 2-day rental returned 1
hour late would be assessed a $4 late fee. A 5-day rental returned
1-hour late would be assessed a $4 late fee.

Blockbuster continued this policy of collecting large late fees as long
as customers would line up and pay them. But Blockbuster's customers can
now rent DVDs with no late fees, at lower prices, from stores with a
much better selection. Will this latest business strategy help
Blockbuster by "eliminating a significant negative associated with the
brand name?" Some business analysts feel that this plan will backfire.

Here are the details of the latest Blockbuster compromise:

*** *** ***

DEC. 14 | Bowing to the realities of a changing competitive landscape,
Blockbuster Video on Tuesday said it would eliminate most late fees in
2005.

Beginning with the New Year, consumers will get a one-week grace period
beyond the scheduled due date on movies and videogames. If the product
still isn't returned at that point, the customer's account will be
charged a purchase price equal to the price the product was selling for
on the date rented.

Those who rented new releases will be charged the new release purchase
price; those renting older titles will be charged the previously viewed
disc price.

Even then, the customer will have 30 days in which to return the product
for a full credit, minus a $1.25 restocking fee.

The move knocks out the last pillar of Blockbuster's original business
model, which for two decades involved charging customers an upfront fee
with each rental and imposing late fees if the movie isn't returned on
time.

During the past year, the rental giant has completely overhauled its
model and now offers monthly subscriptions, both in-store and online,
and has eliminated late fees for those who still choose to pay on a
per-rental basis.

But while the move is likely to be greeted enthusiastically by
renters--who have long chafed at paying late fees--it carries large risk
for Blockbuster by eliminating a significant revenue stream.

The company projected that late fees would have contributed $250 million
to $300 million in operating income in 2005, roughly the same as in
2004.

Although Blockbuster did not disclose total revenue derived from late
fees, analysts estimated Tuesday that the $250 million to $300 million
in operating income probably represents about $300 million to $350
million in gross revenue.

Blockbuster chairman and CEO John Antioco said he expects to offset that
loss through an increase in overall rentals and other new initiatives.

"I don't want to get into the gory details, but through a combination of
revenue increases that will go toward offsetting the loss of late fees,
plus other changes in our business model, we hope it will be revenue
neutral in 2005," Antioco said.

The impact will still be negative, however, due to an expected $50
million in initial costs associated with implementing the program.

Most of that will be spent on advertising to promote the change.

The company also said it will reduce capital in 2005 by about $100
million compared to 2004 spending, mostly by scaling back new store
openings and store remodels.

The move also is bound to introduce a new layer of complexity to
managing the chain's rental inventor, which now will be almost
completely unmoored from firm return dates.

As recently as six months ago, Antioco told analysts that he would love
to eliminate late fees but couldn't see a way to guarantee that movies
would be returned without them.

Now, however, he says he sees little choice but to take the risk.

"Consumers have a lot of options for getting movies today that do not
involve incurring late fees, from retail, to Netflix to video-on-demand,
and there will probably be more in the future. So in that sense, I think
this reflects a realistic view of the marketplace. It recognizes the
competitors we have today and the competitors we're likely to have in
the future."

The move also is designed to reposition Blockbuster with consumers,
Antioco said, by eliminating a significant negative associated with the
brand name.

"It's no secret that late fees have been an issue with consumers and
that the issue has gotten more and more acute over the last several
years," he said. "We want the Blockbuster brand to be perceived in the
most positive way possible, and we have a number of revenue streams that
could be enhanced if the brand were perceived more positively."

Analysts weren't so sure, however.

"I don't get it," independent analyst Dennis McAlpine said. "I don't see
how you replace $300 million [in revenue] by getting people to feel more
warm and fuzzy about Blockbuster."

The market also seemed unsure, sending Blockbuster's shares up a modest
20¢ on the day.

"I don't think anybody gets it," McAlpine said.

McAlpine also questioned Blockbuster's cut back in planned new store
openings in 2005.

"I don't know why you'd cut back at a time when Hollywood can't open
any," he said. "You know Hollywood will have to start opening them
quickly after the sale because they'll have to repay the buyer. This
seems like the time Blockbuster should be grabbing all the market share
it can get."

Given Blockbuster's huge rental market share, the move is bound to set
off ripples throughout the industry.

No. 2 rental chain Hollywood Video is likely to be sold in 2005, perhaps
to Blockbuster, which is among the bidders for the company.

With a sale pending, however, Hollywood is unlikely to risk a
significant cut in revenue by following Blockbuster's example.

No. 3 retailer Movie Gallery might face more scrutiny.

To date, the Dothan, Ala.-based chain has largely resisted the move
toward subscriptions and other no-late-fee models.

Movie Gallery also is a bidder for Hollywood, however. Should it
prevail, it would find itself facing far more head-to-head competition
with Blockbuster due to the heavy concentration of Hollywood stores in
close proximity to Blockbuster outlets.

Hollywood and Movie Gallery officials did not return calls seeking
comment.

http://www.videobusiness.com/article...4&catType=NEWS

One-Shot Scot

this move will retard Blockbuster's eventual extinction, albeit not for very
long.

the only thing now that can give them an edge is porn, and they're too
Republican to do that

Vlvetmorning98

>In its glory days,
>Blockbuster became a DVD rental leech and was able to extort over $300
>million in annual gross revenue from its late fees.

If you're going to use big words like "extort," try doing it correctly, idiot.
Blockbuster's fines were never a secret so anyone stupid enough to keep movies
out too long doesn't get to complain about it after the fact. If you sign a
contract giving me permission to hit you in the face every Wednesday, guess
what I'm going to do?

> When Blockbuster
>customers complained on this newsgroup, they were advised to shop
>elsewhere.

And to comprehend the things they agree to. That's be a nice adult thing for
these morons to do.

>These late fees were not calculated
>on a daily rate, so a DVD that was only 1 hour late would not be
>prorated (as was done originally) but charged a late fee equal to the
>original rental price.

Good. Lazy jerks keeping tapes out too long ruined things for everyone else so
the late fees needed to be as prohibitive as possible (here's a hint, genius,
prorating wouldn't have sent the message that needed to be sent).

>But Blockbuster's customers can
>now rent DVDs with no late fees, at lower prices, from stores with a
>much better selection.

Netflix is dying. Get a brain.

Omarichu

Omarichu wrote:

>>In its glory days,
>>Blockbuster became a DVD rental leech and was able to extort over $300
>>million in annual gross revenue from its late fees.
>>
>>
>
>If you're going to use big words like "extort," try doing it correctly, idiot.
>Blockbuster's fines were never a secret so anyone stupid enough to keep movies
>out too long doesn't get to complain about it after the fact. If you sign a
>contract giving me permission to hit you in the face every Wednesday, guess
>what I'm going to do?
>
>
>
>>When Blockbuster
>>customers complained on this newsgroup, they were advised to shop
>>elsewhere.
>>
>>
>
>And to comprehend the things they agree to. That's be a nice adult thing for
>these morons to do.
>
>
>
>>These late fees were not calculated
>>on a daily rate, so a DVD that was only 1 hour late would not be
>>prorated (as was done originally) but charged a late fee equal to the
>>original rental price.
>>
>>
>
>Good. Lazy jerks keeping tapes out too long ruined things for everyone else so
>the late fees needed to be as prohibitive as possible (here's a hint, genius,
>prorating wouldn't have sent the message that needed to be sent).
>
>
>
>>But Blockbuster's customers can
>>now rent DVDs with no late fees, at lower prices, from stores with a
>>much better selection.
>>
>>
>
>Netflix is dying. Get a brain.
>
>
Finally...someone posting here with an adult brain. When you rent a
movie and it says it has to be back by noon on the 3rd day and you KNOW
this and you are late-then expect to pay a late fee. It doesnt take a
genius to figure that out. All those complaining about late fees. Get
those rented movies back on time fer crying out loud.

Hey Zeus

On 12/16/04 7:28 AM, in article q0gwd.5610$,
"Hey Zeus" <> wrote:

>>
> Finally...someone posting here with an adult brain. When you rent a movie and
> it says it has to be back by noon on the 3rd day and you KNOW this and you are
> late-then expect to pay a late fee. It doesnt take a genius to figure that
> out. All those complaining about late fees. Get those rented movies back on
> time fer crying out loud.
>

Nobody¹s arguing that. But given a choice between a shop with relatively
limited selection that imposes late fees and one with a relatively expansive
collection that doesn¹t.........personally, I¹ll take the latter every time.
It¹s a better deal for me so why wouldn¹t I? And if enough other people do
the same, then THAT¹s got to be part of BB¹s good business decision-making
process * do lost customers cost them more than they stand to net from the
imposition of late fees.

Neal
--
"If morons could fly, it'd be pitch black." - Anonymous

Video Flyer

"Omarichu" <> wrote in message
news:...
> >In its glory days,
> >Blockbuster became a DVD rental leech and was able to extort over
> $300 million in annual gross revenue from its late fees. If you're
> going to use big words like "extort," try doing it correctly, idiot.
> Blockbuster's fines were never a secret so anyone stupid enough to
> keep movies out too long doesn't get to complain about it after the
> fact. If you sign a contract giving me permission to hit you in the
>face every Wednesday, guess what I'm going to do?


Blockbuster's attitude was exactly the same as yours: "If you don't like
it, **** off!" Many Blockbuster customers who were not satisfied with
the arrangement, contract or no contract, went elsewhere. Then,
Blockbuster started changing its policies.

From the quoted article:

"The move ... is designed to reposition Blockbuster with consumers,
Antioco said, by eliminating a significant negative associated with the
brand name."

"It's no secret that late fees have been an issue with consumers and
that the issue has gotten more and more acute over the last several
years," he said. "We want the Blockbuster brand to be perceived in the
most positive way possible, and we have a number of revenue streams that
could be enhanced if the brand were perceived more positively."

Blockbuster admits that its previous policies gave a significant
negative association to its name. The dissatisfied customers didn't
change, Blockbuster did.

So, who won the war? It certainly wasn't you.

P.S.

Don't forget, your DVDs are due back by NOON!

****wad.

One-Shot Scot

"Omarichu" wrote in alt.video.dvd:
>If you're going to use big words like "extort," try doing it correctly, idiot.
>Blockbuster's fines were never a secret so anyone stupid enough to keep movies
>out too long doesn't get to complain about it after the fact. If you sign a
>contract giving me permission to hit you in the face every Wednesday, guess
>what I'm going to do?

What I don't understand is going to the opposite end of the scale. If
there are now no more late fees for a week's grace period, does that
mean every "2-day" (really 1.5-day) rental is now a 9-day rental?

Isn't that going to diminish the selection even more? (Not that it
was ever all that terrific.)

--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com/
"Don't move, or I'll fill you full of [... pause ...] little
yellow bolts of light." -- Farscape, first episode

Stan Brown

"Stan Brown" <> wrote in message
news:
> "Omarichu" wrote in alt.video.dvd:
>> If you're going to use big words like "extort," try doing it
>> correctly, idiot. Blockbuster's fines were never a secret so anyone
>> stupid enough to keep movies out too long doesn't get to complain
>> about it after the fact. If you sign a contract giving me permission
>> to hit you in the face every Wednesday, guess what I'm going to do?
>
> What I don't understand is going to the opposite end of the scale. If
> there are now no more late fees for a week's grace period, does that
> mean every "2-day" (really 1.5-day) rental is now a 9-day rental?
>
> Isn't that going to diminish the selection even more? (Not that it
> was ever all that terrific.)

That's what I was thinking. They will have to either stock more copies
of each movie or end up with more unhappy customers who can't get the
movie they want. Neither option will improve their bottom line.
--
Buford T. Justice
The alt.video.dvd faq is located at:
http://aww-faq.org/dvdfaq.html

FAQmeister

In article <>,
Stan Brown <> wrote:

> What I don't understand is going to the opposite end of the scale. If
> there are now no more late fees for a week's grace period, does that
> mean every "2-day" (really 1.5-day) rental is now a 9-day rental?
>
> Isn't that going to diminish the selection even more? (Not that it
> was ever all that terrific.)

Indeed it will. I asked a friend of mine who works at Blockbuster about
this very issue and she told me they're going to increase the number of
copies they have on new releases, but she said it will likely not be
enough... Copy depth is already a problem due to the sheeps desire to
have that "hot new blockbuster" title that very first week it's out. I
can pretty much guarantee if I went into my local Blockbuster this
Saturday night, they will be out of Collateral and I, Robot.

You combine this with the fact that they have a bunch of customers
already on their "movie pass" and those customers don't have to bring
back their rentals at any specific time and it's bad news. They aren't
going to have anything in-stock anymore and the very same customers who
always bitched about late fees and having to bring back movies in 2 days
are now going to complain that the Tom Cruise and Adam Sandler movies
they want to rent are never in stock anymore...
--
"Our enemies are innovative and resourceful, and so are we.
They never stop thinking about new ways to harm our country and our people,
and neither do we." - George Dumbya Bush

Black Locust

One-Shot Scot wrote:
> For those who still rent DVDs from baked clay and plaster stores,
> Blockbuster's latest concession might be of interest. In its glory
days,
> Blockbuster became a DVD rental leech and was able to extort over
$300
> million in annual gross revenue from its late fees. When Blockbuster
> customers complained on this newsgroup, they were advised to shop
> elsewhere. Apparently, many Blockbuster customers have taken this
> excellent advice.
>
> For many years, Blockbuster was able to gouge its customers with
> exorbitant "extended viewing fees." These late fees were not
calculated
> on a daily rate, so a DVD that was only 1 hour late would not be
> prorated (as was done originally) but charged a late fee equal to the
> original rental price. This meant that a $4, 2-day rental returned 1
> hour late would be assessed a $4 late fee. A 5-day rental returned
> 1-hour late would be assessed a $4 late fee.
>
> Blockbuster continued this policy of collecting large late fees as
long
> as customers would line up and pay them. But Blockbuster's customers
can
> now rent DVDs with no late fees, at lower prices, from stores with a
> much better selection. Will this latest business strategy help
> Blockbuster by "eliminating a significant negative associated with
the
> brand name?" Some business analysts feel that this plan will
backfire.
>
> Here are the details of the latest Blockbuster compromise:
>
> *** *** ***
>
> DEC. 14 | Bowing to the realities of a changing competitive
landscape,
> Blockbuster Video on Tuesday said it would eliminate most late fees
in
> 2005.
>
> Beginning with the New Year, consumers will get a one-week grace
period
> beyond the scheduled due date on movies and videogames. If the
product
> still isn't returned at that point, the customer's account will be
> charged a purchase price equal to the price the product was selling
for
> on the date rented.
>
> Those who rented new releases will be charged the new release
purchase
> price; those renting older titles will be charged the previously
viewed
> disc price.
>
> Even then, the customer will have 30 days in which to return the
product
> for a full credit, minus a $1.25 restocking fee.
>
> The move knocks out the last pillar of Blockbuster's original
business
> model, which for two decades involved charging customers an upfront
fee
> with each rental and imposing late fees if the movie isn't returned
on
> time.
>
> During the past year, the rental giant has completely overhauled its
> model and now offers monthly subscriptions, both in-store and online,
> and has eliminated late fees for those who still choose to pay on a
> per-rental basis.
>
> But while the move is likely to be greeted enthusiastically by
> renters--who have long chafed at paying late fees--it carries large
risk
> for Blockbuster by eliminating a significant revenue stream.
>
> The company projected that late fees would have contributed $250
million
> to $300 million in operating income in 2005, roughly the same as in
> 2004.
>
> Although Blockbuster did not disclose total revenue derived from late
> fees, analysts estimated Tuesday that the $250 million to $300
million
> in operating income probably represents about $300 million to $350
> million in gross revenue.
>
> Blockbuster chairman and CEO John Antioco said he expects to offset
that
> loss through an increase in overall rentals and other new
initiatives.
>
> "I don't want to get into the gory details, but through a combination
of
> revenue increases that will go toward offsetting the loss of late
fees,
> plus other changes in our business model, we hope it will be revenue
> neutral in 2005," Antioco said.
>
> The impact will still be negative, however, due to an expected $50
> million in initial costs associated with implementing the program.
>
> Most of that will be spent on advertising to promote the change.
>
> The company also said it will reduce capital in 2005 by about $100
> million compared to 2004 spending, mostly by scaling back new store
> openings and store remodels.
>
> The move also is bound to introduce a new layer of complexity to
> managing the chain's rental inventor, which now will be almost
> completely unmoored from firm return dates.
>
> As recently as six months ago, Antioco told analysts that he would
love
> to eliminate late fees but couldn't see a way to guarantee that
movies
> would be returned without them.
>
> Now, however, he says he sees little choice but to take the risk.
>
> "Consumers have a lot of options for getting movies today that do not
> involve incurring late fees, from retail, to Netflix to
video-on-demand,
> and there will probably be more in the future. So in that sense, I
think
> this reflects a realistic view of the marketplace. It recognizes the
> competitors we have today and the competitors we're likely to have in
> the future."
>
> The move also is designed to reposition Blockbuster with consumers,
> Antioco said, by eliminating a significant negative associated with
the
> brand name.
>
> "It's no secret that late fees have been an issue with consumers and
> that the issue has gotten more and more acute over the last several
> years," he said. "We want the Blockbuster brand to be perceived in
the
> most positive way possible, and we have a number of revenue streams
that
> could be enhanced if the brand were perceived more positively."
>
> Analysts weren't so sure, however.
>
> "I don't get it," independent analyst Dennis McAlpine said. "I don't
see
> how you replace $300 million [in revenue] by getting people to feel
more
> warm and fuzzy about Blockbuster."
>
> The market also seemed unsure, sending Blockbuster's shares up a
modest
> 20¢ on the day.
>
> "I don't think anybody gets it," McAlpine said.
>
> McAlpine also questioned Blockbuster's cut back in planned new store
> openings in 2005.
>
> "I don't know why you'd cut back at a time when Hollywood can't open
> any," he said. "You know Hollywood will have to start opening them
> quickly after the sale because they'll have to repay the buyer. This
> seems like the time Blockbuster should be grabbing all the market
share
> it can get."
>
> Given Blockbuster's huge rental market share, the move is bound to
set
> off ripples throughout the industry.
>
> No. 2 rental chain Hollywood Video is likely to be sold in 2005,
perhaps
> to Blockbuster, which is among the bidders for the company.
>
> With a sale pending, however, Hollywood is unlikely to risk a
> significant cut in revenue by following Blockbuster's example.
>
> No. 3 retailer Movie Gallery might face more scrutiny.
>
> To date, the Dothan, Ala.-based chain has largely resisted the move
> toward subscriptions and other no-late-fee models.
>
> Movie Gallery also is a bidder for Hollywood, however. Should it
> prevail, it would find itself facing far more head-to-head
competition
> with Blockbuster due to the heavy concentration of Hollywood stores
in
> close proximity to Blockbuster outlets.
>
> Hollywood and Movie Gallery officials did not return calls seeking
> comment.
>
> http://www.videobusiness.com/article...4&catType=NEWS

I feel sorry for the first customer who goes beyond the grace period
and is given a bill for the "rental" retail price, which like in the
days of vhs is a heck of a lot more than the "consumer" retail price.
I might be mistaken but last time I checked this type of pricing was
still in effect.

littlejoeflub@yahoo.com