No More Blockbuster Late Fees!

[crazytimes]

No More Blockbuster Late Fees
Wednesday December 15 12:53 PM ET

As of January 1, 2005, Blockbuster will no longer be charging late fees for overdue rentals.

By Lisa Johnson, FilmStew.com

In an effort to compete with mail order video services such as Netflix, Blockbuster is eliminating one of its major sources of income: late fees. The company announced that as of Jan. 1, 2005, there will be no more late fees charged on any movie or game rental at its more than 4,500 company-operated and participating franchised stores in the United States.

"Doing away with late fees is the biggest and most important customer benefit we've ever offered in our company's history," said John Antioco, Blockbuster chairman and CEO.

But there is a catch. Under the "no late fees" program, Blockbuster still has due dates -- one week for games and two days or one week for movies. But customers now have a one-week grace period at no additional charge. At that point, if customers want to keep the movie or game longer, they can. Blockbuster will automatically sell them the product, less the rental fee. If customers decide they don't want to own the movie or game, they simply return the product within 30 days for a full credit to their account, less a minimal restocking fee.

So how will Blockbuster make money? For the past year the company has been testing a variety of rental options in markets across the U.S. In "no late fees" test markets, the increased rental transactions and retail sales offset the lower level of revenues resulting from eliminating late fees. Additionally, the company will lower its ongoing marketing, operating and promotional costs.

Over the past 18 months, Blockbuster has also attempted to bolster business by launching in-store movie, in-store game and online DVD subscription programs which offer customers no due dates, no late fees and an unlimited number of movie or game rentals, up to three at a time depending on the program, for one low monthly fee.

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