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Blockbuster - Late fees are back and copying the Redbox Model

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Blockbuster - Late fees are back and copying the Redbox Model

Old 03-29-09, 07:10 PM
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Blockbuster - Late fees are back and copying the Redbox Model

EDIT: As of 4/1/09 (not April Fools joke) the plan has been canceled (not postponed). Not sure why...also no stores can sell Rewards cards, only renew.

Figured I'd let you all know...

Starting roughly April 9th late fees are officially back at Blockbuster. But how?
Each store will rent out Games, DVDs, Blu-rays at a certain price point per day.

Lets say DVD is $1.99 the first day and .99 the next until its retuned. They will also have a "week" plan where you can rent the DVD for 7 days for a flat fee ($4.99).

Why are they doing this? Trying to copy the Redbox model which is becoming more and more common. Will it work? Oh hell no. Not only will people have to re-adjust to "late fees", but most stores will wind up crediting those peoples accounts like crazy which means they would be making even less. The Rewards program is also dead.

Last edited by Gizmo; 04-01-09 at 04:01 PM.
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Old 03-29-09, 07:15 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Stupid. I use Hollywood video anyway, but there switching to Powerplay which is more expensive then the current MVP program. Plus you get less.
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Old 03-29-09, 07:16 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Originally Posted by GizmoDVD View Post
The Rewards program is also dead.
So does this mean that they will credit each account $9.99? Naaaah Still, they should do something for everybody who just signed up for the account.

My Blockbusters in the area are all franchise locations, so I doubt this will effect me. But considering I just canceled my Blockbuster Online, I doubt I will ever step foot in there again.
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Old 03-29-09, 08:55 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Originally Posted by GizmoDVD View Post
Figured I'd let you all know...

Starting roughly April 9th late fees are officially back at Blockbuster. But how?
Each store will rent out Games, DVDs, Blu-rays at a certain price point per day.

Lets say DVD is $1.99 the first day and .99 the next until its retuned. They will also have a "week" plan where you can rent the DVD for 7 days for a flat fee ($4.99).

Why are they doing this? Trying to copy the Redbox model which is becoming more and more common. Will it work? Oh hell no. Not only will people have to re-adjust to "late fees", but most stores will wind up crediting those peoples accounts like crazy which means they would be making even less. The Rewards program is also dead.
Are you saying the Rewards program is dead as of April 9? I just signed up for it 3-4 months ago (it was free because of a certificate I got for doing some online surveys somewhere). That sucks that I won't get the year's use from it.
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Old 03-29-09, 08:58 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

rewards isn't dead but is pretty pointless.
we are still offering renewals to curent customers but not asking new people if they want it.

an odd occurrence at our store is people coming in from
Hollywood and saying they don't like the new
hollywood points system.

We have a meeting thursday to tell us about the new
pricing structure, it's gonna be fun.

I'm not sure how much longer my
store will stay open.
It's essentually a 1 person during the day all the time now and
only 2 or 3 nights with 2 people.

Last edited by whotony; 03-29-09 at 09:03 PM.
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Old 03-29-09, 11:02 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

I am not saying I am a fan of Blockbuster, but the endless bitching about anything they try to do does get seriously old.

First off...

Rewards is NOT dead. In fact, if you are a Rewards member, you get even a better value than you ever did before. Especially if you rent games. You can rent five daily rentals if you wish, which is considerably cheaper than the previous prices, and on your sixth free rental you can still use it for whatever you want so you can pick a full price regular DVD new release or a full price game rental for a week and get it for free. And the Rewards program is staying around. They only want employees focusing on getting the word out about the new pricing plan.

If you rented the old way and preferred that, you still can...week long rentals for regular price are still an option.

They still don't charge late fees. If you choose the daily rental plan, it's due the next day by close of business. Yes, if you keep it beyond that it's a dollar extra per day. A G*D* DOLLAR. So if you paid $2.50 to rent a new release for a day and keep it an extra couple days, it's still cheaper than it was to rent it for full price before. Like I said, no matter what they do, people are going to bitch, bitch, bitch. Want it longer? Pay the full five bucks for five days. The days of $3.99 or $4.99 per day "extended viewing fees" are not coming back.

The only BIG change that's probably going to catch some people is the grace period to get your movie is extremely shortened now. It used to be you had an extra ten days to get your movie back after the day it was DUE. Now it's ten days after the day you RENT IT, regardless if you pick a daily rental or a 5 day rental. (They say weekly on their in store signs, but put five days in parenthesis after it.)



Is it a day late and a dollar short for the 'Buster? I think so. The sad fact for them is that they could have had the "Redbox" market long ago if they wanted it. The DVD vending machine idea was in use by them in the United Kingdom (and probably elsewhere in the world...I am not sure...I just happened to see it several years ago on blockbuster.co.uk) and for whatever reason they didn't bring it to the United States. You mean to tell me they couldn't have figured out a way to corner a market with "Blue Box?" I will never understand businesses that allow themselves to become obsolete when they have the power to change with the times. Blockbuster had the opportunity long before Red Box ever came along.

Another fact...they owe over a BILLION dollars between bad bank loans and bad debt owed to studios. They are no longer able to get any extensions on their loans with Bank of America, and it's do or die for them. This new program is their final play at poker, so to speak. This is the final hand for Blockbuster, and they are putting it all on this one hand of cards. If they were an online retailer with this kind of debt, they would not be around any more (think the problems DVDexpress.com had back in the day and multiply that by a multitude.)

I think that Blockbuster may never go away. While I think the powers that hold control of the company will fail, the stores themselves are actually performing very well. It's the only thing in the company right now actually making money. The money lost in this company isn't at the store level, it's corporate's fault. So while the stores are showing that they can make money, they will be of interest to an investor down the road.

I predict the corporation that holds control of Blockbuster is going to collapse. I believe the time limit they have to come up with the money they need to get out of debt is August of this year. They will fail. That's not the store's fault...like I said, they are making money. I see potential for a massive buy out to take place, a massive restructuring, and redundant stores will be looked at and closed down. Especially in metro areas, how many Blockbusters are within like five minutes of each other?

But as far as the pricing...if you don't like the daily rentals, you still have the week (five days) at the same prices they were before. So just shut the hell up.

Oh, and they took restocking fees away, which some you thought was a "late fee" as well, and it wasn't.
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Old 03-29-09, 11:39 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Originally Posted by calhoun07 View Post
I am not saying I am a fan of Blockbuster, but the endless bitching about anything they try to do does get seriously old.

First off....
Good to hear from an actual BB employee. I am obviously not a fan of theirs and would hate for all those people to lose their job, but if it happens, I will be pissing on their (BB) gravestone. They've been dicking around with the studios far to long and I'm glad some are finally cutting them off (except Sony - wonder why BB pushed Blu-ray so hard?). While I have yet to rent from a Redbox, I will be moving to a location where once is a 2 minute walk and I plan on taking full advantage of it.
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Old 03-30-09, 10:17 AM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

The new plan is great if you like old movies and have the Rewards program. If I go on Monday-Wednesday, I can pay a total of $5 for 10 movies. Then I have a free new release or game waiting for me. So $5 for 11 movies (one being a new release) isn't bad at all.

The Blockbusters by me started this a couple weeks back and I've already taken full advantage.
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Old 03-31-09, 11:31 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

I was just reading a story about Redbox today that also talks about the misfortunes of Blockbuster. And Blockbuster does have it's own US based DVD vending machines... they are just a day late and a dollar short. Redbox was started by McDonalds and was of course successful, they just decided to get back to the food business so they are in the process of selling it to... Coinstar.

The thing that worried me a little was Universal's attempt to delay new releases to Redbox for 45 days, kind of a form of the return of rental pricing.

And Blockbuster? Screw them, they're dead meat. They couldn't even keep a brick and mortor store open in my town of 120,000 people because they suck so bad (Family Video dominates the market here).

http://www.latimes.com/business/la-f...,3496501.story

Redbox's $1 vending-machine video rentals worry movie studios

By Dawn C. Chmielewski
March 30, 2009

The hottest thing in movie rentals is as old as the Coke machine -- and just as red.

Redbox movie kiosks are popping up by the thousands in supermarkets, drugstores, restaurants and convenience stores around the country. The kiosks stock DVDs that rent for $1 a day, a remainder-bin price that is less than a cup of coffee at Starbucks.

For all the talk about the Internet, Wi-Fi and cellphones becoming the new gateways to watch movies and wiping out the corner Blockbuster, a ubiquitous vending machine the size of a refrigerator is becoming a growing concern to Hollywood.

Consumers are pulling DVDs out of the Redbox kiosks in record numbers, undermining longtime economics that have propped up the movie business -- and in the process triggered a backlash from a major studio that sought to cut off Redbox's supply of hot new DVDs.

"We have grown at a phenomenal pace over the last six years, and that growth is continuing, even in the midst of the recession," said Gregg Kaplan, chief executive of Oakbrook Terrace, Ill.-based Redbox Automated Retail. "We're not seeing anything that's slowing it down."

Redbox operates nearly 12,900 kiosks throughout the U.S. -- four times as many locations as Blockbuster Inc. -- and plans to introduce 7,100 more by the end of the year. Each machine holds as many as 700 DVDs and 200 movie titles.

Consumers rent a DVD from the machine using their credit or debit cards, which enables Redbox to charge an additional day's rental if the DVD is not returned within a 24-hour period. A typical kiosk can earn significant coin: about $50,000 annually in revenue per machine in operation after three years.

Blockbuster could be getting green with envy at Redbox. The Dallas-based movie rental giant started rolling out its own DVD-vending kiosks last summer and is testing dollar-a-night rentals at 600 stores, with plans to roll out the new pricing to 4,000 outlets.


"We have been watching very carefully as they have progressed," Blockbuster Chief Executive Jim Keyes said. "We think it is very consistent with what Blockbuster does, which is to provide convenient access" to home entertainment.

The discount DVD rental business worries Hollywood movie studios because of fears that it is undercutting DVD sales, which dropped 13% in the fourth quarter and were projected to fall at least 6% more in the first quarter, according to analysts.

DVD sales historically have been how the studios earn a profit on movies, because ticket sales are barely enough to offset production and marketing costs. Some studios believe that consumers will forgo buying DVDs if they have a cheap option to rent movies.

"You could make a bit of an argument that rental is cannibalizing [DVD purchases] in 2008, especially in a recession year, where everyone is watching their nickels," said Tom Adams, a video industry analyst.

The spread of Redbox's kiosks, coming as DVD sales started to decline, has triggered alarms within Universal Studios. Last year it sought to withhold DVDs from Redbox until 45 days after release to prevent competition with sales. When Redbox rejected the deal, Universal ordered wholesalers to cut off supplies. Redbox then sued Universal, alleging restraint of trade.

Universal has responded in court filings that it has the right to direct wholesalers to conform with the studio's marketing plans and determine when a motion picture ought to be made available to the public.


In the early part of the decade, when DVD sales were booming, Hollywood paid little attention to Redbox. At the time, the kiosks barely registered a blip on the screen. The company was owned by fast-food giant McDonald's Corp., which saw in the fragmented vending machine industry an opportunity to bring the same consolidation and conformity it brought to burgers, fries and shakes.

Market testing by McDonald's in 2004 showed that consumers were willing to use the vending machines, which crossed the look of a London phone booth with the retro functionality of a cafeteria automat, as a cheap and quick alternative to the video store. The kiosks caught on, especially in supermarkets, where they catch customers' eyes as they push their grocery carts through the checkout counters.

The combination of errands to fill the cupboard and rent movies, as well as the consistent flow of customers, turned out to be advantageous: By the end of 2005, Redbox reported that it was renting more than a million DVDs a month out of 1,200 locations.

"It's a regularity of traffic, and the biggest single place people are going after the supermarket is to their homes," Redbox's Kaplan said. "Consumers tend not to rent DVDs when they're not going home."

McDonald's, however, decided that vending machines were not part of its core fast-food business. It set up Redbox as a separate company and ultimately sold control of Redbox to Bellevue, Wash.-based Coinstar Inc., an operator of coin-counting machines, coin-operated games and kiddie rides that crowd the exit aisles of supermarkets (last month, Coinstar announced that it would acquire full interest).

Coinstar's strong relationships with supermarket operators soon had the Redbox kiosks springing up in chains such as Albertsons, Walgreens and even Wal-Mart, which accounts for 40% of DVD sales.


Coinstar does not disclose earnings for Redbox. But its automated DVD rental business, which includes the smaller DVDXpress kiosk operation, reported operating income of $73 million on revenue of $388.5 million in 2008. The company expects sales to nearly double this year to between $690 million and $750 million.

Video industry analyst Adams estimates that the kiosk rental market, which totaled $519 million last year, will reach $1.4 billion in five years -- or about one-fourth of Blockbuster's 2008 revenue.

"You could view that as directly competitive" with Blockbuster, Adams said. "It's a cheaper option, and during a recession people embrace it."
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Old 03-31-09, 11:34 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

blockbuster has canceled this plan indefinitely.
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Old 04-01-09, 03:56 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Originally Posted by whotony View Post
blockbuster has canceled this plan indefinitely.
What plan?
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Old 04-01-09, 04:00 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Ahh, I see now, its been post-poned.
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Old 04-01-09, 04:01 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Originally Posted by whotony View Post
blockbuster has canceled this plan indefinitely.
It was still going when I went in yesterday...
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Old 04-01-09, 04:13 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

it is still going on in test stores and maybe some franchises.
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Old 04-01-09, 05:33 PM
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Re: Blockbuster - Late fees are back and copying the Redbox Model

Originally Posted by whotony View Post
it is still going on in test stores and maybe some franchises.
Kansas City is one test market area, so it's still going on here. I am not sure when the national roll out is going to be.
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