Jump to content


Blockbuster's no latefee's policy backfires


Rune
 Share

Recommended Posts

Sorry, I don't have a link I'm reading this out of my WSJ but they don't let you get into the online story unless you have an online subscription.

 

Either way, the company lost over 138.1 million in revenue due to their much advertised "No Late Fee's Policy".

 

Pretty suprising as they really advertised the hell out of that campaign but I'm guessing it didn't attract that many new customers and just lead to abuse by their customers.

Link to comment
Share on other sites

Blockbuster has been hit by a class-action suit over their shady advertising. Despite the fact that they eliminated late fees, if you keep a movie or game over 7 days, they will charge you the full price for the item. If you bring it back within 30 days, you only have to pay a $1.50 fee for "restocking". They will then resind the sale charge.

 

When I was there last week, they gave me a huge roll of discounts with my reciept, including 4 free rentals, like 10 discounts, and a rent one, get one free coupon. The explanation with the discounts was that this was the result of a class-action suit brought against the company.

Link to comment
Share on other sites

Blockbuster has been hit by a class-action suit over their shady advertising. Despite the fact that they eliminated late fees, if you keep a movie or game over 7 days, they will charge you the full price for the item. If you bring it back within 30 days, you only have to pay a $1.50 fee for "restocking". They will then resind the sale charge.

 

When I was there last week, they gave me a huge roll of discounts with my reciept, including 4 free rentals, like 10 discounts, and a rent one, get one free coupon. The explanation with the discounts was that this was the result of a class-action suit brought against the company.

897294[/snapback]

I've been saying that since the beginning of these "no late fees". There are still late fees, they just changed the name. My local video rental place is just like that. Instead of late fees, they just recheck the movie out for you and you have to pay the rental fee again. There isn't much of a difference other than the fact that you get to keep the movie awhile longer.

Link to comment
Share on other sites

actual there is a huge difference .. in the past if you didn't get it back in by noon on the given day you get hit with a full rental fee

 

now you can keep it a full week past the due date without paying a fee .... and then if you get it in within 30 days it is only a $1.50 late fee ... as opposed to $4 if you are an hour late

 

in some cases you can keep a movie 2 weeks and not pay a fee

 

i like the new policy (also keep in mind they were hit with a class action a number of years back over their old late fee policy as well.....)

 

the only thing I don't like is that they have increased the price of the online rental service to $18 a month

Link to comment
Share on other sites

the only thing i don't like about it is that there are NEVER any new movies avaliable to rent. Same thing applies for video games.

897341[/snapback]

It's because the new late fee policy gets abused. People keeps movies/games for two weeks minimum, sometimes four weeks and return it just to pay the restocking fee of 1.25

I bet Madden won't be seen for a while in Blockbuster. I know one BB That isn't too well known still has 13 copies in as of 3pm.

Link to comment
Share on other sites

Good.

 

I honestly don't really care at all, but anything that affects Huipinga in a negative way is a great thing :thumbup .

897500[/snapback]

You are by far the most petty person in the world.

Link to comment
Share on other sites

Good.

 

I honestly don't really care at all, but anything that affects Huipinga in a negative way is a great thing :thumbup .

897500[/snapback]

Huizinga doesn't own Blockbuster anymore.

897987[/snapback]

 

Woah, when did that happen?

898532[/snapback]

he sold the whole shabang

 

remember blockbuster golf and games on 136 ave and sr 84 in davie???

when that place closed is when he sold blockbuster (8 years ago maybe)?? i think..

Link to comment
Share on other sites

Good.?

 

I honestly don't really care at all, but anything that affects Huipinga in a negative way is a great thing :thumbup .

897500[/snapback]

Huizinga doesn't own Blockbuster anymore.

897987[/snapback]

 

Woah, when did that happen?

898532[/snapback]

Sheesh Accord, where ya been? :confused

Link to comment
Share on other sites

I think as of right now, I'm still paying $14.99. I've had it for two months now and have paid that amount. I don't remember it only being for one month at that price when I signed up. I would have went with netflix otherwise just because friends have said its great. As for Blockbuster Online, I have no complaints, just compliments. I've received all movies in a timely manner and its so damn easy to go in and change your choices. They even email you to tell you the movies were mailed and a delivery date.

Link to comment
Share on other sites

It was owned by Viacom. The last I heard they were going to spin it off as a stand alone company. This was about a year ago. Not sure if it ever happened though.

898698[/snapback]

I work at Blockbuster. December '04 Blockbuster became independent of Viacom (mostly because Viacom let them)...At the time, the movie pass had been around for about 6 months, and it was a MAJOR money-loser. At 14.99 for the first month and no contract, people were basically paying the first month, cancelling, and starting again at a different store or under a different name (or just stopping altogether).

 

Once Blockbuster split from Viacom, they took a different approach, and introduced the no late fee policy, ONLY because Netflix was stealing a lot of their customers. The idea was simple enough, and if only they had advertised responsibly and correctly, but....THEY BLEW IT. Their TV ads were rediculously misleading, because they never mentioned that if you don't return your movie within 30 days, they charge it to your credit card.

 

As you all know, 48 states then sued the company, and Blockbuster had to pay up big. And NOW, a settlement was recently reached regarding a 2001 class action lawsuit, and every member who was active at the time receives between 6 and 13 coupons (ranging from free "non new release" to "$1 off").

 

And to top it off, they've just raised the price of movies (20 cents) and games (1 dollar), as well as both the movie and game pass (1 out movie pass from 14.99 to 19.99, the others soon to follow).

 

And in a very ironic turn of events, in the last few months, Blockbuster has been promoting the forgotten "Rewards" program (9.95 for the entire year). When the movie pass came out last summer, all stores basically got rid of Rewards advertisements in lue of the 'Movie Pass'. It turns out that the profit isn't made on the initial 9.95 payment, but on the successive visits from customers who have the Rewards (candy, sell-thru movies, more rentals, etc.)

 

If only they knew what hellish nightmare would ensue....

Link to comment
Share on other sites

Guest markotsay7

Y'all can thank me for my subscription :)

 

(Any time you read something in print and want the article let me know.)

 

Blockbuster Reports Net Loss,

Withdraws 2005 Profit Outlook

Quarterly Revenue Fell 1.6%

As Company Cut Late Fees;

Stock Price Declines 11%

 

By MIKE ESTERL

Staff Reporter of THE WALL STREET JOURNAL

August 10, 2005; Page B3

 

Blockbuster Inc. reported a worse-than-expected second-quarter loss and saw its shares tumble, as the video-store chain's management invests heavily to try to reinvent the company amid shrinking demand.

 

The big loss comes just three months after a bitter proxy fight in which New York financier Carl Icahn and two allies secured board seats. Mr. Icahn had argued that management should curtail its spending on new ventures and boost dividends to shareholders.

 

Dallas-based Blockbuster posted a net loss of $57.2 million, or 31 cents a share, in the second quarter, against net income of $48.6 million, or 27 cents a share, a year ago. Revenue slipped 1.6% to $1.40 billion.

 

Its share price fell 92 cents, or 11%, to $7.09 in 4 p.m. New York Stock Exchange composite trading after the company also pulled its 2005 earnings guidance -- the first time it hasn't provided guidance since going public in 1999.

 

Blockbuster said that January's elimination of most late fees cost the company $138.1 million in lost revenue during the second quarter and that its rental gross margin dropped to 66.4% from 72.4% a year ago as it moves to a more subscription-focused model. It added that selling, general and administrative expenses rose 4.3% to $761.1 million from the year-earlier quarter, driven in part by operating costs linked to the rollout of an online service that was launched a year ago.

 

John Antioco, Blockbuster's chairman and chief executive, said in an interview that the broad overhaul has produced a "year of pain and sacrifice" for the company's bottom line. Still, "the decision was absolutely justified based on the condition of the store-based rental industry," he said.

 

Video rental chains are struggling to attract customers as mass merchants such as Wal-Mart Stores Inc. sell DVDs at bargain-basement prices and upstarts such as Netflix Inc. rent videos through online subscriptions. Cable and satellite companies also are offering an increasing menu of pay-per-view services.

 

Mr. Antioco acknowledged the elimination of late fees has removed a big source of revenue for the company but noted that it also has increased traffic in its nearly 5,800 stores in the U.S. He also said Blockbuster's online business, which offers DVDs by mail and is expected to generate an operating loss of $120 million in 2005, has signed up one million subscribers thus far and should reach two million subscribers before the end of March.

 

In a sign that management is moving to trim its losses, Blockbuster said it is increasing the basic subscription price for its online rental service by $3 to $17.99 a month -- bringing it flush with Netflix, of Los Gatos, Calif., which reported 3.2 million subscribers at the end of June and posted a small profit in the second quarter.

 

Mr. Antioco predicted that Blockbuster will swing back to an overall profit in the fourth quarter and in 2006 as its recent investments start to pay dividends. He said that advertising outlays will head lower in the second half of the year and that management is "controlling and tightening and lowering costs wherever possible." The company doesn't plan to add this year to its retail network of more than 9,100 stores world-wide.

 

Still, some analysts are troubled by Blockbuster's latest results, which come on the heels of a $57.5 million loss in the first quarter. Revenue, operating margins and expenditures are "all going in the wrong direction," said Stacey Widlitz, an analyst at the research firm Fulcrum Global Partners. She has a neutral recommendation on the stock.

Link to comment
Share on other sites

Ya, I don't really know who Antioco is trying to fool--Blockbuster isn't going to be making any gain in the next 2 years, let alone in the next few months. I don't have a formal survery, but I'd wager that the number of active customers in my store dropped by at least 10 percent in the past few months...Many of the 'regulars' even told me they were switching to Netflix (not that it makes a difference...)

 

It'll all be moot once the satellite/cable rental industry kicks into gear.

 

Oh, and did I mention that almost every kid who comes to the store knows how to break open the cases within 5 seconds.

Link to comment
Share on other sites

I had rented something from a Blockbuster a few weeks ago and kept it a few days beyond the due date. They started to call me everyday and sent stuff in the mail. That really pissed me off,

900632[/snapback]

You get an extra week 'grace period', which begins after the original due date. They send you a letter (or phone call) on the 1st day of the grace period. It's worded very poorly, and 95% of the people who get it believe they have already been charged.

 

The phone calls are only to 'remind' you that you have an extra week to return the movie, and then you'll be charged.

 

Ask me how many times I've said that to customers in the past few months?

 

ASK!

Link to comment
Share on other sites

How many times Lefty?

 

And btw, the price for a rental at Blockbuster of a non-release movie is absurd now as well...I found that out today...

900675[/snapback]

Probably 50 times a day for the last 150 days...

 

Patience is a virtue.

 

And ya, 4.76 per dvd is rediculous. Movie pass is a great asset if you get movies often.

Link to comment
Share on other sites

This thread is quite old. Please consider starting a new thread rather than reviving this one.

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...