15 December 2004
Blockbuster Ends Late Fees
Posted by Ryan Sarver under: Business .
Blockbuster is talking about abolishing late fees. The catch… if you keep the movie beyond the grace period you automatically get charged the full retail price of the movie. If you get your copy back to them in 30 days, you get reimbursed minus a restock fee. What will be interesting to see is what Blockbuster considers their "retail" price. Anyone who has lost a new release knows that their retail price can be upwards of $100.
Also, anyone who understands the Blockbuster business model knows that
they make all of their revenue on late fees. So why would they abolish
late fees? Only if they had come up with a scheme to make higher
margins. Let’s see how long this lasts.
Blockbuster, in the
light of all of the recent competition from Netflix and on-demand
movies, is looking for any way to scrape some more margins out of the
few remaining customers.
You can read more about the late fee changes here (Forbes).
