Blockbuster raises it's rental fees

Discussion in 'DVD Video' started by RichA, May 21, 2005.

  1. RichA

    RichA Guest

    In Ontario, Canada at least. Rentals are with
    tax just shy of $6.00. Maybe the "no late
    fees" isn't working out as well as they'd
    hoped?
    -Rich
    RichA, May 21, 2005
    #1
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  2. RichA

    Guest

    RichA wrote:
    > In Ontario, Canada at least. Rentals are with
    > tax just shy of $6.00. Maybe the "no late
    > fees" isn't working out as well as they'd
    > hoped?
    > -Rich


    There was a story here a week or so ago that the shelves are
    empty at Blockbuster, because there's no longer an incentive
    to bring them back right away.

    If that's widespread, then not only has the company lost the
    income from late fees, but they are losing income from rentals.
    If someone keeps a DVD out three weeks, it keeps the DVD from
    being rented out during that period.

    Michael
    , May 21, 2005
    #2
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  3. RichA

    Invid Fan Guest

    In article <>,
    <> wrote:

    > RichA wrote:
    > > In Ontario, Canada at least. Rentals are with
    > > tax just shy of $6.00. Maybe the "no late
    > > fees" isn't working out as well as they'd
    > > hoped?
    > > -Rich

    >
    > There was a story here a week or so ago that the shelves are
    > empty at Blockbuster, because there's no longer an incentive
    > to bring them back right away.
    >
    > If that's widespread, then not only has the company lost the
    > income from late fees, but they are losing income from rentals.
    > If someone keeps a DVD out three weeks, it keeps the DVD from
    > being rented out during that period.
    >

    Where as online rental places make more money when you keep DVD's out
    longer.

    --
    Chris Mack "Refugee, total shit. That's how I've always seen us.
    'Invid Fan' Not a help, you'll admit, to agreement between us."
    -'Deal/No Deal', CHESS
    Invid Fan, May 21, 2005
    #3
  4. RichA

    Alpha Guest


    > Where as online rental places make more money when you keep DVD's out
    > longer.


    Wrong logic. The individual stores have a very limited stock. Netflix has
    a huge stock of copies of titles from multiple and interacting warehouses.
    Alpha, May 21, 2005
    #4
  5. RichA

    Tarkus Guest

    On 5/21/2005 2:42:52 PM, Alpha wrote:

    >> Where as online rental places make more money when you keep DVD's out
    >> longer.

    >
    > Wrong logic. The individual stores have a very limited stock.
    > Netflix has a huge stock of copies of titles from multiple and
    > interacting warehouses.


    How does that make what he said wrong? There can be no denying that
    Netflix makes more money by people keeping their titles out longer,
    because they save on shipping and handling without losing out on incoming
    revenue.
    --
    "I don't reckon I got no reason to kill nobody. Mmm."

    Now playing: "Howard Stern Radio Show - 012799-cf (Best of Stern)"
    Tarkus, May 21, 2005
    #5
  6. RichA

    Alpha Guest

    "Tarkus" <> wrote in message
    news:9.com...
    > On 5/21/2005 2:42:52 PM, Alpha wrote:
    >
    >>> Where as online rental places make more money when you keep DVD's out
    >>> longer.

    >>
    >> Wrong logic. The individual stores have a very limited stock.
    >> Netflix has a huge stock of copies of titles from multiple and
    >> interacting warehouses.

    >
    > How does that make what he said wrong? There can be no denying that
    > Netflix makes more money by people keeping their titles out longer,
    > because they save on shipping and handling without losing out on incoming
    > revenue.
    > --
    > "I don't reckon I got no reason to kill nobody. Mmm."
    >
    > Now playing: "Howard Stern Radio Show - 012799-cf (Best of Stern)"


    They do not save anything by long returns. Explain that convoluted attempt
    to justify again. It would be a dynamic between stock and income, but just
    how do they save? If that logic holds, if everyone kept their rentals for a
    year, Netflix would not be losing 15 million dollars a quarter.
    Alpha, May 21, 2005
    #6
  7. RichA

    Alpha Guest

    Forget what I said...if everyone kept the rentals for a year, it would
    deplete stock, but of course they would get monthly fees to cover it beyond
    the sales price!
    Alpha, May 21, 2005
    #7
  8. RichA

    Tarkus Guest

    On 5/21/2005 3:44:50 PM, Alpha wrote:

    > Forget what I said...if everyone kept the rentals for a year, it would
    > deplete stock, but of course they would get monthly fees to cover it
    > beyond the sales price!


    Bingo.
    --
    "Satan, your ass is gigantic and red. Who am I going to pretend you
    are, Liza Minelli?"

    Now playing: "Howard Stern Radio Show - 012799-cf (Best of Stern)"
    Tarkus, May 22, 2005
    #8
  9. RichA

    Alpha Guest

    "Tarkus" <> wrote in message
    news:9.com...
    > On 5/21/2005 3:44:50 PM, Alpha wrote:
    >
    >> Forget what I said...if everyone kept the rentals for a year, it would
    >> deplete stock, but of course they would get monthly fees to cover it
    >> beyond the sales price!

    >
    > Bingo.
    > --
    > "Satan, your ass is gigantic and red. Who am I going to pretend you
    > are, Liza Minelli?"


    Your quote needs attribution: South Park, Bigger, Longer, and Uncut.
    Alpha, May 22, 2005
    #9
  10. RichA

    Tarkus Guest

    On 5/21/2005 4:27:44 PM, Alpha wrote:

    >> "Satan, your ass is gigantic and red. Who am I going to pretend you
    >> are, Liza Minelli?"

    >
    > Your quote needs attribution: South Park, Bigger, Longer, and Uncut.


    More fun when people try to guess where it came from. At least I did put
    it in quotes.
    --
    "I takened the kaiser blade, some folks called it a sling blade, I
    called it a kaiser blade, mmm, and I hit my mother upside the head
    with it. Mmm... Killed her."

    Now playing: "Howard Stern Radio Show - 012799-cf (Best of Stern)"
    Tarkus, May 22, 2005
    #10
  11. RichA

    Nonymous Guest

    "Invid Fan" <> wrote in message
    news:210520051712153053%...
    > In article <>,
    > <> wrote:
    >
    >> RichA wrote:
    >> > In Ontario, Canada at least. Rentals are with
    >> > tax just shy of $6.00. Maybe the "no late
    >> > fees" isn't working out as well as they'd
    >> > hoped?
    >> > -Rich

    >>
    >> There was a story here a week or so ago that the shelves are
    >> empty at Blockbuster, because there's no longer an incentive
    >> to bring them back right away.
    >>
    >> If that's widespread, then not only has the company lost the
    >> income from late fees, but they are losing income from rentals.
    >> If someone keeps a DVD out three weeks, it keeps the DVD from
    >> being rented out during that period.
    >>

    > Where as online rental places make more money when you keep DVD's out
    > longer.


    There's an incentive to return the movies rented online because you're
    charged a monthly fee. People want to get the most out of that monthly fee
    by renting as much as possible.
    Nonymous, May 22, 2005
    #11
  12. On Sun, 22 May 2005 06:42:22 -0400, "Nonymous" <>
    wrote:

    <snip>
    >There's an incentive to return the movies rented online because you're
    >charged a monthly fee. People want to get the most out of that monthly fee
    >by renting as much as possible.
    >


    Blockbuster also has a monthly rental program. Locally, it's ~ $10 for
    the first month, and ~ $17 thereafter. You get one movie at a time,
    and exchange it for another as frequently as you choose. I signed up
    to view the first seasons of "24" which I'd missed on TV. I ended up
    getting the first three seasons for a total of $10, much cheaper than
    renting 24 individual DVDs.
    Charlie Hoffpauir
    http://freepages.genealogy.rootsweb.com/~charlieh/
    Charlie Hoffpauir, May 22, 2005
    #12
  13. RichA

    sed Guest

    There is some logic built into one price rentals.

    What Netflix and Blockbuster count on is renters who sign up and rent
    feverishly for the first month or two, then, only occasionally rent. With
    monthly fees rent one or hundred movies the revenue keeps rolling in.

    Blockbuster stores in the past have made money on each rental. New releases
    two days, old stuff a week. New one price per month in-store keeps a
    continuing flow of revenue to the store. If you rent 30 movies or one movie
    the revenue is constant. Go on vacation, Blockbuster still makes money.

    Where Blockbuster appears weak is their anticipation of rental demand. "No
    late fees" keeps movies out longer. But if they exceed the time that
    revenue transfers into sales. On the online side of the business they
    appear to be funding demand with movies returned from the stores and not
    making a large investment in additional inventory. Think about it, if they
    use old DVDs from stores and now they have increased the amount of time of
    the rental period at no charge, then, that leaves less inventory for online.
    Any Blockbuster store has a significant amount of DVDs for new releases
    which over time declines. Given the lame excuse for management at
    Blockbuster they probably thought online was a method for using some of that
    excess inventory as rental demand declined.

    I opine that unless Blockbuster somehow revolutionizes DVD rentals within a
    year, first the president who is already at the door will be out and the
    number of Blockbuster stores will begin a steady decline.

    Netflix appears to have a superior online distribution system and will only
    increase subscribers over the next year. The Netflix business model is less
    costly than the Blockbuster convoluted mess of a business model.

    If there is a Blockbuster person out there maybe you can answer this
    question. Blockbuster counts subscribers quoting 750,000 online
    subscribers. At the same time some number of "in-store subscribers" have
    probably converted to on-line. So, when Blockbuster quotes 750,000 online
    is there any discounting for subscribers who no longer use in-store?

    "Invid Fan" <> wrote in message
    news:210520051712153053%...
    > In article <>,
    > <> wrote:
    >
    > > RichA wrote:
    > > > In Ontario, Canada at least. Rentals are with
    > > > tax just shy of $6.00. Maybe the "no late
    > > > fees" isn't working out as well as they'd
    > > > hoped?
    > > > -Rich

    > >
    > > There was a story here a week or so ago that the shelves are
    > > empty at Blockbuster, because there's no longer an incentive
    > > to bring them back right away.
    > >
    > > If that's widespread, then not only has the company lost the
    > > income from late fees, but they are losing income from rentals.
    > > If someone keeps a DVD out three weeks, it keeps the DVD from
    > > being rented out during that period.
    > >

    > Where as online rental places make more money when you keep DVD's out
    > longer.
    >
    > --
    > Chris Mack "Refugee, total shit. That's how I've always seen us.
    > 'Invid Fan' Not a help, you'll admit, to agreement between us."
    > -'Deal/No Deal', CHESS
    sed, May 23, 2005
    #13
  14. RichA

    Invid Fan Guest

    In article <bA8ke.24443$>, sed
    <> wrote:

    > Netflix appears to have a superior online distribution system and will only
    > increase subscribers over the next year. The Netflix business model is less
    > costly than the Blockbuster convoluted mess of a business model.
    >

    But if the earlier post stating Netflix's losses is a sign, the
    business model may not work in the long run without more changes (raise
    the price back up, move it to 2 disks out at a time, etc).

    --
    Chris Mack "Refugee, total shit. That's how I've always seen us.
    'Invid Fan' Not a help, you'll admit, to agreement between us."
    -'Deal/No Deal', CHESS
    Invid Fan, May 23, 2005
    #14
  15. RichA

    Nonymous Guest

    "Invid Fan" <> wrote in message
    news:220520052039163100%...
    > In article <bA8ke.24443$>, sed
    > <> wrote:
    >
    >> Netflix appears to have a superior online distribution system and will
    >> only
    >> increase subscribers over the next year. The Netflix business model is
    >> less
    >> costly than the Blockbuster convoluted mess of a business model.
    >>

    > But if the earlier post stating Netflix's losses is a sign, the
    > business model may not work in the long run without more changes (raise
    > the price back up, move it to 2 disks out at a time, etc).


    This is a problem for *both* sides. Blockbuster is probably taking even a
    *more* major hit with the low price they're offering. For customers
    watching and returning ASAP, there's no way the monthly fee is even covering
    the postage.

    Both companies are 'playing chicken' - each company is now operating at a
    lost hoping the other will give up first. Blockbuster's advantage: tons
    more money to burn and a retail business to help keep that fuel tank from
    going empty. Disadvantage: shareholders, spoiled by mostly continual
    profits and dividends, will only stand for burning money like that for so
    long.
    Nonymous, May 23, 2005
    #15
  16. RichA

    campu2 Guest

    Nonymous wrote:
    > "Invid Fan" <> wrote in message
    > news:220520052039163100%...
    > > In article <bA8ke.24443$>, sed
    > > <> wrote:
    > >
    > >> Netflix appears to have a superior online distribution system and will
    > >> only
    > >> increase subscribers over the next year. The Netflix business model is
    > >> less
    > >> costly than the Blockbuster convoluted mess of a business model.
    > >>

    > > But if the earlier post stating Netflix's losses is a sign, the
    > > business model may not work in the long run without more changes (raise
    > > the price back up, move it to 2 disks out at a time, etc).

    >
    > This is a problem for *both* sides. Blockbuster is probably taking even a
    > *more* major hit with the low price they're offering. For customers
    > watching and returning ASAP, there's no way the monthly fee is even covering
    > the postage.
    >
    > Both companies are 'playing chicken' - each company is now operating at a
    > lost hoping the other will give up first. Blockbuster's advantage: tons
    > more money to burn and a retail business to help keep that fuel tank from
    > going empty. Disadvantage: shareholders, spoiled by mostly continual
    > profits and dividends, will only stand for burning money like that for so
    > long.


    I would bump my monthly fee up and stay profitable. Long term
    subscribers
    are more interested in selection and service than saving a few dollars
    every month. The most frequent complaint I hear about netflix is the
    long
    wait on titles. Understandable if you are talking new releases, but
    they
    should restock on popular older titles.

    -------------------------------------------------
    CampU2 - Trade your DVDs for ours (One for One)
    http://groups.msn.com/campu2
    --------------------------------------------------
    campu2, May 25, 2005
    #16
  17. RichA

    Invid Fan Guest

    In article <>,
    campu2 <> wrote:

    [regarding Netflix]

    > I would bump my monthly fee up and stay profitable. Long term
    > subscribers
    > are more interested in selection and service than saving a few dollars
    > every month. The most frequent complaint I hear about netflix is the
    > long
    > wait on titles. Understandable if you are talking new releases, but
    > they
    > should restock on popular older titles.
    >

    Unless people are leaving netflix due to this, there's little reason
    for the company to spend money buying more copies of older releases.
    After all, it won't make them more money, and the "point" of the
    service is you give them a wish list and they fill it as titles become
    avalible. That may not be what all their customers want, but that's
    what Netflix is set up to do. You have to wait three weeks for that
    movie to be sent to you? So long as you had other choices in your queue
    they could send that's not their problem.

    --
    Chris Mack "Refugee, total shit. That's how I've always seen us.
    'Invid Fan' Not a help, you'll admit, to agreement between us."
    -'Deal/No Deal', CHESS
    Invid Fan, May 26, 2005
    #17
  18. RichA

    campu2 Guest

    Invid Fan wrote:
    > In article <>,
    > campu2 <> wrote:
    >
    > [regarding Netflix]
    >
    > > I would bump my monthly fee up and stay profitable. Long term
    > > subscribers
    > > are more interested in selection and service than saving a few dollars
    > > every month. The most frequent complaint I hear about netflix is the
    > > long
    > > wait on titles. Understandable if you are talking new releases, but
    > > they
    > > should restock on popular older titles.
    > >

    > Unless people are leaving netflix due to this, there's little reason
    > for the company to spend money buying more copies of older releases.
    > After all, it won't make them more money, and the "point" of the
    > service is you give them a wish list and they fill it as titles become
    > avalible. That may not be what all their customers want, but that's
    > what Netflix is set up to do. You have to wait three weeks for that
    > movie to be sent to you? So long as you had other choices in your queue
    > they could send that's not their problem.
    >
    > --
    > Chris Mack "Refugee, total shit. That's how I've always seen us.
    > 'Invid Fan' Not a help, you'll admit, to agreement between us."
    > -'Deal/No Deal', CHESS



    I've read one article stating that Netflix's retention rate is 92%.
    Pretty good, but that was from an older article before Blockbuster
    started competing. I like Netflix, but there were a few older titles
    where I waited for months and they were always unavailable.
    New or old, if a title is unavailable for months, It seems like they
    would buy a few more copies to add to their inventory.

    ------------------------------­------------------
    CampU2 - Trade your DVDs for ours (One for One)
    We accept virtually ALL movie titles in trade.
    http://groups.msn.com/campu2
    ------------------------------­-------------------
    campu2, May 26, 2005
    #18
  19. RichA

    Anoni Moose Guest

    Invid Fan wrote:
    > In article <bA8ke.24443$>, sed
    > <> wrote:
    >
    > > Netflix appears to have a superior online distribution system and will only
    > > increase subscribers over the next year. The Netflix business model is less
    > > costly than the Blockbuster convoluted mess of a business model.
    > >

    > But if the earlier post stating Netflix's losses is a sign, the
    > business model may not work in the long run without more changes (raise
    > the price back up, move it to 2 disks out at a time, etc).


    For the subscribers that Netflix currently has, my understanding is
    that they are profitable. The reason they're losing money is because
    of they being in marketshare building expansion mode. The cost of
    getting
    new subscribers quickly is high. It's high because of heavy money
    spent on
    advertising (I know I've seen their ads 'everywhere') plus for each new
    subscriber they're servicing their needs for free or near free for the
    first month. When I upgraded from 3 to 5 at a time, I got the 'extra'
    2
    for free until the next billing as well. Profitable in the long run,
    but
    as they concentrate on building marketshare in this business that's
    only
    now building, the expansion costs exceed the run-time profits. If they
    stopped trying to expand as fast as they can, they'd probably be
    profitable.

    Of course, the more customers they have, the cost-per-customer probably
    goes down a bit due to effiencies of scale.

    If the customer list that Netflix just got from Walmart all get the
    first
    couple weeks or a month free, then their costs will take a hit that
    month w/o offsetting revenue (that month). Etc. At least they saved a
    good bit on the advertising that it would have costed to get that many
    new sign-ups, so the cost-per-new-customer for those would be lower
    than
    others by traditional advertising means.

    Mike
    Anoni Moose, May 26, 2005
    #19
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