Blockbuster, the once mighty king of movie rental stores, has fallen on hard times. According to a recent MarketWatch report, the company experienced a fourth quarter loss of $435 million dollars. Additionally, as we reported last year, the company is planning to close hundreds of stores across the United States. Considering its financial problems, you don't have to be an economist to see that Blockbuster needed to shake things up. Of course, the steps the company has taken to earn back some of their revenues may rub customers the wrong way.
According to a report in Home Media Magazine, Blockbuster has quietly reintroduced late fees (though they're not calling them that) as part of the company's in-store rental policy. Per the new rules, a $4.99 DVD or Blu-ray rental may be checked out for five days. If the rental is not returned by the fifth day, customers will face a $1 per day fine, which will cap at $10. So, in essence, if you check out a new release and don't bring it back, you owe Blockbuster $14.99.
Previously, Blockbuster customers were allowed to keep a movie for seven days, but if they didn't return it on time, they were charged the retail value of the DVD. If the customer returned the DVD within 30 days, the charge would be rescinded, but the customer would still be hit with a $1.25 restocking fee. This policy, which was heralded in Blockbuster commercials as "The End of Late Fees," also caused the company some problems when a California court ordered that Blockbuster's advertising was misleading.
While I don't find Blockbuster's new policy particularly troubling ($14.99 is high for a DVD, but it's not extortionary), at this point it's sort of like rearranging deck chairs on the Titanic. Correct me if I'm wrong, but doesn't the age of in-store movie rental seem long gone?
Let's take a look at the movie rental market. On one hand, you have Netflix, which pioneered the "sit on your couch at home and let DVD's come to you" approach to movie renting, hitting an all-time high in its stock value ($70/share). Then, on the other hand, you have Redbox, which, despite disagreements with studios over when to release new rentals, is popping up on every corner with no-hassle $1 per day rentals. And don't even get me started on live-streaming movies online. Once that really begins to take off, where will the Blockbuster model fit? The answer: nowhere.
What do you think, does the return of late fees make you mad? How do you rent movies?