Blockbuster franchises quietly reintroduce late fees

By Davis Freeberg

It looks like quitting late fees is turning out to be as tough as quitting smoking for some Blockbuster franchises. Forbes is running an article that points out that many of the Blockbuster franchises have quietly begun implementing the late fee program again. According to Forbes “Many Arkansas stores resumed the late fees on November 21 and charges will apply again soon at various stores in Alabama, Mississippi and Tennessee.” It may be the $300 million per year in late fees that Blockbuster was forced to give up when they ended the controversial program, but according to one franchise owner it was the lack of available titles that drove this decision.

“It’s a mechanism by which we can get customers to bring the movies back,” he said. “Our business is all about availability. If somebody keeps a new release that’s in high demand out for two weeks, that means it’s not there for someone else to rent. With the lack of any kind of late-fee structure the movies weren’t coming back. Customers would come in and there wouldn’t be any movies for them to rent,”

Blockbuster’s tenuous relationship with their franchises will continue to present problems for the company as more customers migrate to the online distribution system. Blockbuster has a tendency to focus heavily on new releases instead of driving demand to the long tail. This is an expensive strategy that forces the company to rely heavily on pre-owned DVD sales to unload excess inventory. Given the on demand nature of Blockbuster’s business model, it was inevitable that we would see some type of backlash against the all you can eat model. While the end of the late fees program will help franchises keep better stock, it is sure to be unpopular with customers who’ve grown accustomed to keeping their movies for longer periods of time. Some feel that Blockbuster never really ended late fees and the Arkansas Attorney general has already announced that he is looking into how this latest decision will affect Blockbuster’s class action settlement.

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