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Blockbuster to test subscriptions to let customers avoid late fees

Old 04-25-02, 07:08 PM
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Blockbuster to test subscriptions to let customers avoid late fees

Blockbuster to test subscriptions to let customers avoid late fees

4-25-02


News & Record


Posted 4:42 p.m.

DALLAS (AP) -- Blockbuster Inc. officials say they believe that more people would rent movies if they didn't have to return the tapes and DVDs a couple days later.

The chain plans to test that theory this summer by letting some customers pay a subscription fee and keep a handful of movies as long as they want without paying late fees.

The Dallas-based entertainment giant has profited by devoting more shelf space in its stores to DVDs. Now it wants to head off competition from pay-per-view on cable and mail-order rentals from companies such as Netflix Inc. that offer more convenience.

Under an approach to be tested in one city this summer, customers would pay a monthly fee ranging from $19.99 to $29.99 to cover unlimited rentals for that month. For the smaller fee, they could get two movies at a time, for the larger fee they could rent three or four titles together.

Blockbuster also will test a variant in which customers would pay a yearly fee of perhaps $49.99 to $59.99 and get to keep up to three movies as long as they want. They would still pay a rental fee, typically $3.99, when they check out each movie.

Company officials announced the trials during a conference call with analysts Wednesday. They declined to identify the two test cities -- a spokeswoman said they didn't want to tip off competing cable systems.

Chairman and chief executive John Antioco said the subscription service could be Blockbuster's form of video-on-demand, a tantalizing prospect that hasn't yet come into widespread use.

Antioco said customers love browsing video stores, "but one of the things they've not particularly crazy about is extended-viewing fees," Blockbuster's term for late fees.

"What we've done is developed a model that ... we believe provides the consumer an opportunity to take home more movies than they normally do, keep them longer and still spend more money with us than they would otherwise," he said.

Antioco called the hassle of returning tapes and DVDs on time "one of the largest potential obstacles" to rentals.

Customers have filed several lawsuits against Dallas-based Blockbuster over its late-fee policy. In January, a Texas state judge in Beaumont approved a settlement in a class-action lawsuit under which Blockbuster will issue coupons with a face value of about $450 million to millions of customers.

The lack of late fees has helped Netflix, which claims more than 500,000 subscribers. For $19.95 per month, they can rent up to three DVDs at a time and return them in postage-paid envelopes. The Los Gatos, Calif.-based company's service is popular in the Bay Area but not on the East Coast because DVDs take longer to arrive by mail.

"The end game is to do what the customer wants, and the customer doesn't like late fees," said Sarah Gragg, an analyst for Robertson Stephens who follows Blockbuster but doesn't own its stock.

Gragg said the average renter gets fewer than two movies per month, and Blockbuster could profit handily by converting customers to a $19.99 monthly fee, even though it might require more inventory.

"Blockbuster is always looking for additional growth vehicles, and they're extremely successful with most of them," Gragg said.
http://www.news-record.com/news/now/blockbuster25.htm
Old 04-25-02, 08:26 PM
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Wait! Hold on! I would have to pay them $49.99 a year plus 3.99 everytime I rent just to keep the movie as long as I wanted? No way! Plus doesn't Blockbuster know that if they let the people keep the movie as long as they want they will NEVER return the movie? This just goes to show how dumd Blockbuster is.
Old 04-25-02, 10:32 PM
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Blockbuster also will test a variant in which customers would pay a yearly fee of perhaps $49.99 to $59.99 and get to keep up to three movies as long as they want.

They would still pay a rental fee, typically $3.99


Old 04-25-02, 10:38 PM
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Originally posted by ChowYunFat
Plus doesn't Blockbuster know that if they let the people keep the movie as long as they want they will NEVER return the movie? This just goes to show how dumd Blockbuster is.
That doesn't really matter; netflix does the same thing.

Sure in theory you could keep the movie forever, but you are still being charged your monthly fee for it, and you are giving up a rental slot that could be used to rent other movies. Sooner or later you'd be "paying" more to keep that movie then it would be for you to buy it yourself.

Look at it this way:


$20.00 for 2 rentals a month

Each rental slot can therefore be looked at as $10.00.


If you keep a rental for 5 months, you have paid $50.00 (5 months x $10) for a DVD you could have purchased at your local best buy for $17.99.

Last edited by agent2099; 04-25-02 at 10:45 PM.
Old 04-25-02, 10:42 PM
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Its a good idea and a good way for Blockbuster to take out the competition (Netflix etc.). But they are asking for WAY WAY too much money. I rent from Blockbuster and rarely have a problem with late fees. No way am I paying a subscription AND a rental fee. I mean most of Blockbusters rentals are 5-day anyway. I always find time to watch a movie in 5 days, I don't need a subscription!
Old 04-25-02, 10:50 PM
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Originally posted by Goat3001
Its a good idea and a good way for Blockbuster to take out the competition (Netflix etc.).
I don't think it'll hurt netflix's business too much. One of the conveniences of netflix is I never have to leave my home. The DVDs arrive in my mailbox and I ship them out the same way, free of charge. Another issue is netflix stocks about 200% more content then any Blockbuster out there. As long as Blockbuster continues to ignore users who want criterions, more obscure titles, anime, WIDESCREEN titles, etc. they won't be able to tap into the netflix userbase.

Last edited by agent2099; 04-25-02 at 10:52 PM.
Old 04-26-02, 12:34 AM
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I do not like the idea of still having to pay $3.99 plus the subscription fee. I hope they retune this before it gets to the public.
Old 04-26-02, 01:52 AM
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It won't work for Blockbuster like it does for Netflix. Why? Because BBV is trying to combine both worlds. You can have unlimited check out times if EVERYBODY is doing that. But when a fraction of your customers do it, and the majority want to know when a copy will be back . . . it won't work unless BBV increases their copy depth even MORE than its already rediculous levels.

With the yearly fee plan, you are basically just paying for your late fees up front. You get nothing extra out of it. Simply put, you pay us $60 in late fees up front, and we'll waive anything over that for the year. Anything under that, we'll keep that too! BBV got sued over collecting late fees after the fact, so now they are going to try to sock you for them up front!

If I was going to pay $60 for three movies for as long as I want, why wouldn't I just spend the $60 on buying them? Oh yeah, because BBV says that renting is better for no particular reason!

"What we've done is developed a model that ... we believe provides the consumer an opportunity to take home more movies than they normally do, keep them longer and still spend more money with us than they would otherwise," Antioco said.
This is hysterical! He says it like the customer really WANTS to spend more money but can't figure out a way to do it. What a buffoon!

"The end game is to do what the customer wants, and the customer doesn't like late fees," said Sarah Gragg, an analyst for Robertson Stephens who follows Blockbuster but doesn't own its stock.
Maybe they should own stock. BBV does not play the end game by this standard. I have never seen another company treat its customers like sheep and cattle.

This whole thing reeks of BBV mentality. "The customer is stupid and we can convince them of it." Hopefully this will become such a fiasco that it damages them even further.


Last edited by Abob Teff; 04-26-02 at 01:54 AM.
Old 04-26-02, 02:59 AM
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i actually took a survey on this...i told them there was no way in hell i was going to pay extra for this. Of course, i also said that there was no way in hell I was gonna rent a movie for 3.99+tax, when i can usually buy it for about double the price
Old 04-26-02, 03:19 AM
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Well, I used to work at Blockbuster and I know some customers who would love this program. The ones that have kids who can never remember to bring back movies and if they would include them, video games on time.

Also there are also those people that have HUGE amounts of late fees on their accounts. The best one was a guy who came in and had over $150 in late fees on his account and said he didn't know how that happened, but it had to be our fault.
Old 04-26-02, 03:59 PM
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Here is why I love competition:

Because Blockbuster Video is being dominated in my market by a local (now regional) video chain (Family Video), Blockbuster Video only charges $2.50 for its new releases.

Of course, I have never paid to rent anything there, I am using a "free rental per week for a year" card I got for signing up for DirectTV.

As for the original post, it does sound like they are trying to mimic NetFlix's strategy, and I think that it would work for Blockbuster Video. I wouldn't do it, but I can see how some people would go for the idea.
Old 04-26-02, 05:16 PM
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This has got to be the lamest idea I've heard all month. And I hear a lot of lame ideas.
You're trying to tell me that customers can come in and pick up the new releases for $3.99 + a $50 annual fee, and they can return it whenver they darn well please? Unless they plan on stocking 1000 copies of everything, the shelves are going to bare. A company like Netflix can get away with it because they have a limited number of distribution hubs that do in fact stock hundreds of copies. Try to imagine a Netflix warehouse in every city, and that's what Blockbuster wants to do. That's insane! No thanks, I'll take my $20/ month flat fee to have the discs delivered directly to me, and not have to "hope" that title I want will be in stock when I drive down to Blockbuster.

A personal aside here: I have a Blockbuster within walking distance of my house, but haven't rented there in years. They really do suck, and I refuse to patronize them.
Old 04-26-02, 06:53 PM
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This new idea for Blockbuster is, at most, unimpressive.

This is supposed to make me rent from them? A crap selection is one main reason i dont rent from there
Old 05-01-02, 04:05 AM
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i think you guys are focusing too much on this paragraph :


"Blockbuster also will test a variant in which customers would pay a yearly fee of perhaps $49.99 to $59.99 and get to keep up to three movies as long as they want. They would still pay a rental fee, typically $3.99, when they check out each movie. "


and not this one:

"Under an approach to be tested in one city this summer, customers would pay a monthly fee ranging from $19.99 to $29.99 to cover unlimited rentals for that month. For the smaller fee, they could get two movies at a time, for the larger fee they could rent three or four titles together. "


obviously the first one should fail, there can't be that many stupid people. but the second which is just a copy of netflix has some potential. of course, they would need to carry alot more films and more copies of those films. but where i live, let's see, i think there are 4 or 5 bluckbusters within 10 mintues. if you paid 19.99 or less for 2 movies out at a time, and it worked at every store (since their computers are all linked, it shouldn't be a problem, except for returning it to the right store.) it shouldn't be hard to find what you want, aslong as they carry it.

well if they actually did it for 19.99 or less for two movies, i'd be all over it. i could walk in and rent 2 movies watch and return them and get two more in the same day. plus if you can actually walk in, you can show up tuesday and actually get new releases. i would like the fact that i wouldn't have to wait the few days it would take to mail a dvd to netflix and wait for the new movie.

i actually think, if it is done right, it's a great idea, even if it isn't their own exactly. in the mean time it should be fun to watch and any rental business i have will go to hollywood.
Old 05-01-02, 02:18 PM
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Originally posted by Gsuscryst
obviously the first one should fail, there can't be that many stupid people. but the second which is just a copy of netflix has some potential . . . i actually think, if it is done right, it's a great idea, even if it isn't their own exactly
You are right, the second one does have some potential, but I still can't see it working for a brick and mortar store. The key to making a storefront work is having movies in stock. Since there is no way they can stock like Netflix does (due to space constraints), I see this being the failing point. Simply put, when you have a finite number of copies, you need to know when a movie is coming back for the next customer. Can you imagine walking in and asking for a movie just to hear, "Yes, we have it. But it's out and we don't know for sure when it will come back." It may work if they keep the due dates, I just can't see it working with the unlimited check out time.
Old 05-02-02, 10:53 AM
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This is awesome! I get to pay late fees before I rent now!

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