Blockbuster video is rolling out the ads, proudly proclaiming their lack of late fees. It's a lie, a blatant use of false advertising and marketing gimmicks to revive their struggling business. They have single handedly made this once simple, easy to understand industry confusing, ridiculous, and misleading.
Walking into my local store today, I find the super-hot "Resident Evil 4" on the Gamecube. I immediately pick it up along with a nice set of miniature "Halo 2" action figures. Getting to the counter, the clerk is required to recommend the Game Freedom pass, a decent deal, especially during the holidays. With little new of interest on those shelves, there's no real reason for it right now.
What Blockbuster has done however, forces you to buy the $20 Game Pass. Oh sure, they have "cut" their late fees, but game rentals are now an insane $7.50. Yes, $7.50 for one game for seven days. That's a $2 increase from their old price structure (each store has their own pricing policies, this may be different elsewhere). Granted, there is a "grace" period of one week (meaning the rental is actually 14 days), it's absolutely no excuse for raising rates to cover for the lack of late fee revenue.
So what if I keep this game past the rental period AND the grace period? I'm charged for the game. The full price is usually around $50. Now, I have 30 days to return the game and get that $50 taken off of my account. It's not free though. Nope, you're charged a late feeÖerr, I'm sorry, a "restocking fee." I'm not even sure how much it is, but I can assure you that after paying nearly $8 to get my game, I don't want to find out.
A game is of course one thing, lasting well into the 20-hour rage, sometimes even longer. Movies don't last that long. At an average of two hours, what's the point of letting customers keep a movie for a dozen days? What's the point? How long could it possibly take to get through it? Also consider that movie rates have shot up a few dollars, it all adds up to a company that has literally ran itself into the ground with one of the worst marketing campaigns this country has ever seen.
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Article comments
1 - MrPC
The worst part of the campaign is the slogan itself:
THE END OF LATE FEES...THE START OF MORE.
Huh?? Think of about it. More what? If late fees=crap, then it's THE END OF [CRAP]...THE START OF MORE (CRAP?). That slogan doesn't make sense at all.
Yes, this is all about Best Buyesque Restocking fees, and allowing customers to keep rented movies for a LONG TIME (10 days on new flicks, 13 on old ones).
This is all the more reason, if you rent from Brick and Mortar Stores, to with Hollywood Video (but don't do their gay MVP program), and hopefully Blockbuster NEVER buys out Hollywood video.
2 - MrPC
Why rent from BB when you rent from Hollywood, pay about 4 bucks, pay 1 buck for a good blank DVD-R or DVD+R, and then watch the movie, and copy it if you want it?
Sure dual layer burning is not perfect yet so I stick to single layer burning, and get rid of the crap on the DVD's. I just burn the movie only, since that's what I usually want when I buy a DVD.
3 - Barry
Even worse is Blockbuster Online's new model...
Motto: "Oh, hell, I dunno how to do this... let's just slavishly copy Netflix."
4 - Temple Stark
This is that "free society" I'm talking about: Why rent from BB when you rent from Hollywood, pay about 4 bucks, pay 1 buck for a good blank DVD-R or DVD+R, and then watch the movie, and copy it if you want it?
That's why both Blockbuster and Hollywood video might go down the tubes - people making their own copies then doling them out to friends.
Less people employed, and I guess, giving how cheap and free things are getting, less reason to be employed.
But, on topic, I've been trying to tell everyone even slightly impressed with Blockbuster - No, if you don't return it they'll make you pay for the movie/game. I didn't know about the restocking fees, which um, well, um, as you say, no difference at all.
On the movies however, just pass them around to a few friends to get your money's worth. A few trusted friends.
It's free free free for you and me :) ching.
5 - Aaman
Netflix rocks, alternatively try VOD or CinemaNow/MovieLink - for games, Gamefly/eBay
BB and Hollywood Video are history - probably not even worth the strip mall real estate they occupy - the mgmt should convert them to a chain of adult video stores - better margin
6 - Matt Paprocki
MrPC: Beyond the legality of it all, it does put people out of jobs. I'll always buy or rent official discs. It's not right otherwise. Oh, and the extras are my favorite part.
Hollywood was just bought by Movie Gallery, the former #3 in the industry. Expect their prices to start going up.
I'm not sold on the whole "rent online" buisness model. Sure, it's a great deal if you rent $20 worth of movies a month. If you don't, you've lost money. That needs to change.
7 - Barry
Matt, we love Netflix, for a few reasons:
(1) Once you load up your queue, you can just relax and enjoy the steady stream of movies-you-want-to-see into your mailbox. I've got thirty-some-odd movies in my queue right now, every one of them a winner. And they come right to my door, without necessitating that I budge my lazy butt out of my chair.
(2) Video rental at a neighborhood store in NYC is $4 and up per movie. Watch more than one movie a week, you come out way ahead considering what you'd pay locally.
(3) Selection! Netflix has a gazillion titles in stock; even the artsy video stores in Greenwich Village don't have the selection of foreign films, documentaries, etc. that Netflix has.
I realize that I sound like a Netflix shill, but I'm not. I just love the company because they've taken good care of us and kept us entertained for quite some time now, at a very reasonable price. (They have lower-priced plans, by the way, for less-frequent renters. But my wife and I go through a couple of DVDs every weekend, easily.)
8 - Eric Olsen
super job Matt! I saw the ad and wondered what the catch was and now I know. thanks for staying on top of things and letting the civilians know what's up.
9 - MrPC
Barry:
Although you and your wife see a few DVD's each weekend, you can't deny that Netflix is all about collecting $240/year from each person/family, even if they don't rent anywhere near $240 worth of movies (Assuming each DVD would cost $4 to rent at a regular store).
For every one of you, there are ten others whose renting doesn't come close to $240/year, BUT they still subscribe to Netflix anyways.
Why not a pay as you go model, with a progressive decrease in cost of each rental each month? Like $3 for each DVD rented in a month, but once you hit 4 rentals in a month, each subsequent rental that month is $1.50 up to 10. Once you 10 in a month, each subsequent rental that month is $.50.
Of course Netflix would NEVER do this, because it would cut into profit margins.
I don't like these monthly fee programs because for the average american, there are times they don't rent movies, yet they STILL have to cough up $20 for that month? That's crap.
10 - Eric Olsen
at this point I agree with Matt that when new release DVDs are $14.99 and catalog DVDs go down as low as $5.50, jsut buy the damn things and be done with it
11 - Barry
(shrug) Matt, if they weren't saving me money and offering me items I couldn't find elsewhere, I wouldn't be a Netflix customer. End of story.
I assume that most Netflix subscribers are capable of (a) evaluating their own use of rental DVDs and (b) making rational economic decisions for themselves.
Clearly, many people consider that Netflix offers them a good value. I'm willing to bet that the convenience factor of Netflix is a winning value proposition to a *lot* of users who might not be heavy renters.
12 - Aaman
Netflix churn, especially post the 2 week trial period is not all that much.
Even after the contenders - BBonline, Walmart, none of whom have taken away the crown. And let's not forget that as-yet-unused patent on the process itself.
13 - Barry
Good point about the patent on their business process, Aaman. I hope it proves to be enforceable... I'd like nothing better than the prospect of some scary, leg-breaking intellectual property attorneys facing down Wal-Mart and Blockbuster on Netflix's behalf.
14 - Tom
Yes, I love netflix. I've been a member for about three years after reluctantly trying it "who would want to rent via mail??"
I will never rent any way again.
Innovation baby, innovation.
15 - mrbenning
MrPC, at least with Netflix you know what you're getting into. The last time I rented at a BB they told me the movies were due back at "twelve o'clock." What they didn't tell me was that "twelve o'clock" meant noon. I ended up with eight bucks in late fees. Yeah, I guess I could've looked it up, but they're the only chain that does it that way. Why should I assume otherwise?
My household has been a Netflix subscriber for years. When their monthly fees recently went down, so did ours because we weren't in a contract. That means we can quit any time without extra fees.
Out of the hundreds of dvds we've rented there have only been two wrong movies shipped. I recall having more mess-ups from traditional rental outlets.
Now, I'm not an advocate for getting rid of movie rental stores. There's something about browsing with tangible objects in your hands. The problem is most stores don't have the selection many people want. Walk into a video shop and try to find copies of City Of Lost Children, Tam Po Po, and Dark Days. You might find one or two, but generally not all.
I really think BB and HV screwed themselves by getting rid of selection and attempting to make money on "big" titles. It's their own fault reasonable prices and selection are working against them.
16 - DrPat
I can count on my fingers the number of DVDs I rent - instead, I make my choices from the movie ads and leaders, reviews, etc, then wait for the DVD to be released.
For many movies, I just wait a little bit longer than that, then buy a "previously viewed" copy from BB or Hollywood, or one of the smaller video rental outfits.
17 - Eric Berlin
I've blathered on elsewhere about how much I love Netflix. I probably average three a week (if not more) which equals out to 12 rentals a month without leaving my house once for about $20 = good deal for me. It also allows me to indulge my love of watching marathon television box sets (if that's the right term). No way I'd rent six discs of 24 or Sex and the City from Blockbuster, but on Netflix it's a beautiful thing.
I have to add in my own Block Buster tale:
My wife was sick and we were in between Netflix shipments, so I agreed to go down to the local Block Buster for the first time in about three years.
1) I was appalled that several selections that I was interested in, including "Garden State," were not available. I had made the trip to the store, I had money in my pocket... and they're out of stock. In 2004, that business model makes no sense for an educated consumer.
2) I get to the checkout, and for some wiseass reason I query the checkout girl about the "no late fees, ever" policy. I assumed that as a low-on-totem-pole employee she would immediately agree with me when I mentioned that "it's not really a no late fee policy because your credit card will be charged after a period time."
Little did I know that I was in for a five minute dissertation on how I'm "really saving money" with this policy.
How I'm really saving money is by paying for bare bones cable television and utilizing Netflix as much as possible.
Eric Berlin
Dumpster Bust: Miracles from Mind Trash
18 - Matt Paprocki
"For many movies, I just wait a little bit longer than that, then buy a "previously viewed" copy..."
That's probably the best route. A lot of them have plenty of B1G1 sales or Buy 3 for $20.
I'm still not sold on the convience of Netflix. I have a Movie Gallery right down the street, less than 2 blocks. They have a nice deal called the Matinee movie. You pay a $1 in the morning, have the movie back by 5:30 PM, and that's it. For the Neflix price per month, I could see 20 movies. That's a fine deal, and there's no wasted cash (even though I hate Movie Gallery). Going to the store is hardly a problem and it still wouldn't be, even if it wasn't so close (that Blockbuster is about 3 miles from me).
19 - Eric Berlin
Matt ~ Surely you must admit that your circumstances are very unusual: quick walk (no driving-parking-rent-driving-parking hassle twice for every rental) and very cheap. For many, Netflix is a no-brainer improvement.
20 - mrbenning
Matt,
Does that special work on Saturdays as well?
21 - Phillip Winn
Folks, the restocking fees are $1.25, and the prices of movies certainly haven't gone up at my local Blockbuster. Games, unfortunately, are different.
I covered this on my own blog a while back, and the basic idea is that all rentals are now extended by one week for free, but after that the "late fee" is only $1.25.
Sure, they'll temporarily hit your card for the price of the movie, but you get that back.
Game rentals are expensive, that's for sure, but movie rentals work out alright.
I've been a Netflix member since 1999, but I'm thinking about jumping ship to Blockbuster's online program, which provides two free in-store rentals (and now, they've got an extra week!)
22 - andy marsh
I rent from blockbuster for $20 a month. Two rentals at a time and you keep them as long as you want. The blockbuster is between my house and work, so it's not at all inconvenient, except on Friday evenings, when the line inside the store is a couple of miles long!
23 - Matt Paprocki
Good reason to ressurect this op-ed. Blockbuster is now being investigated by the attorney general in 36 states due the restocking fee actaully being a late fee.
http://www.homemediaretailing.com/index.cfm?sec_id=2&newsid=7152
24 - Eric Olsen
way to stay on it Matt!