Blockbuster Eliminating Late Fees

There’s a headline I never thought I’d write. Citing a changing marketplace, Blockbuster will drop late fees in the new year. Instead, they’ll offer much gentler penalties:

After a one-week grace period, customers will automatically be charged the price of buying the movie or game minus the rental fee. Customers can return the item within 30 days for a full credit to their account, minus a restocking fee of $1.25.

Video rental activity began to decline dramatically during the first half of 2004, with an increasing number of consumers buying titles instead of renting. The competitive threats come from discount stores, supermarkets, bookstores, convenience stores and online services that often sell DVDs at heavily reduced prices.

I’ve never been a Blockbuster fan, but this is a pretty ballsy move. As I’ve understood it, late fees have been a pillar of the video rental industry for fifteen years. Dispensing with them may prove to be a counter-intuitive but masterful move for Blockbuster. I would have liked to be a fly on the wall for the meeting where they took this decision.

Of course, if things don’t work out in the bricks-and-mortar stores, they’re making excellent in-roads online.