In September 2008, Blockbuster Underground reported an apparent trend at Blockbuster Online.
Since then, Blockbuster has shown signs of experimenting with multiple delay tactics, but the Wednesday shipping delay tactic seems to be emerging as one of Blockbuster’s favorites ways to limit the flow of DVDs to some subscribers.
It appears Blockbuster Online has decided to ship few or no DVDs to at least some subscribers on Mondays and Tuesdays regardless of whether or not the subscribers have open queue slots. This delay tactic makes Wednesday the first normal shipping day of the week for some Blockbuster Online subscribers. Therefore, an affected subscriber could have all of his or her online DVDs checked in by Blockbuster on a Friday afternoon and possibly not see any replacement DVDs shipped out until Wednesday of the following week. Because of transit times, the affected subscriber would not actually receive those DVDs until Thursday, Friday, Saturday, or later.
At this point it is unclear if Blockbuster uses its Wednesday shipping delay tactic on all subscribers or just the heavy users. Regardless, there is a clear trend that Blockbuster is not shipping DVDs to at least some subscribers on Mondays and Tuesdays even though those subscribers may have had multiple open slots in their queues for days.
This Wednesday shipping scheme is the most flagrant and egregious delay tactic employed by Blockbuster since the company began its DVD-by-mail service in 2004. Look for Blockbuster to take more shifty courses of action as it continues to squeeze profits from its shrinking customer base.
If you have had any experiences with Monday, Tuesday, and Wednesday shipping at Blockbuster Online, please share your experiences here.
12/29/2008
Maybe It’s Time to Start Hating Blockbuster Again
Remember back in the 1980s, when you wanted to watch a movie, you went to Mom and Pop’s Video Gallery by your local grocery store? You went into a cramped little shop and browsed through a collection of no more than a thousand VHS and Beta video tapes. The store was dimly lit and poorly organized. As you walked by the little room at the back of the store, you peered through the beaded curtain and tried not to let anyone catch you noticing all of the adult titles on the shelves. The little independent video store always stocked the new releases, but they never had more than three copies of any particular title. You just rented what they had, watched it that night, and brought it back before 7:00 the next evening. For years, that was the only option if you wanted to rent movies.
Eventually, Blockbuster came to town. The store was bright, clean, and spacious. They had thousands of titles on the shelves. They were well organized, and everything was easy to find. Best of all, they carried dozens of copies of the most popular new releases. At last, you could have it all, and it did not even cost much more than Mom and Pop’s Video Gallery.
As time went by, the customers of Mom and Pop’s Video Gallery started defecting to Blockbuster, and Mom and Pop started feeling the squeeze of a shrinking customer base and declining profits. Since Mom and Pop did not understand economics, they tried to make up for the reduction in revenue by charging their small loyal customer base more money. It worked in the short term, but the loyal customers eventually stopped coming. One day, you drove by Mom and Pop’s Video Gallery and saw a sign that read, “Closing Sale - All Movies 50% Off.” A month later, the store was closed.
It was then you noticed Blockbuster was the only place around to rent movies. It was okay, at first, because Blockbuster had everything, and the prices were reasonable. Things began to change, however. Blockbuster started raising prices and started getting very strict about polices. The counter clerks started getting more aggressive, apathetic, hostile, and dismissive. It was not long before you realized that Blockbuster was the only game in town, and you were at their mercy.
Things got bad, and they just kept going down hill. You turned in some movies late and got hit with some hefty late fees. A Blockbuster employee forgot to scan one of your returned movies, and you were forced to pay for it. One time, your friend returned your movie for you and accidentally returned it into the wrong Blockbuster. As a result, Blockbuster charged you a ridiculous amount of money for transferring the movie back to the correct store. It was then you realized you hated Blockbuster.
You were not alone in your hatred for Blockbuster. Millions of customers across the nation had shared your experiences, and the resentment began to build. One by one, customers began to swear off Blockbuster forever. Some disgruntled customers started driving across town to one of the few remaining independent video rental stores, others starting just buying movies, some began returning to the theaters, others began subscribing to pay-per-view and premium cable channels. The vanishing customers, hurt Blockbuster, but Blockbuster’s market share was so tremendous, the company found it easy to make up for lost revenue by increasing fees on its remaining customer base.
The big change finally came in late 1990s. The newly created DVD-by-mail industry finally gave movie fans access to more movies, for less money, with more convenience, and fewer headaches. It took a few years, but Blockbuster began to feel the pain as DVD-by-mail companies began to spring up and chew away at Blockbuster’s once overwhelming share of the video rental market.
Perhaps the threat of obsolescence caused Blockbuster to have a change of heart, because the company suddenly started being nice again. Blockbuster store clerks started being friendly, helpful, and understanding once again. In 2004, Blockbuster launched their own DVD-by-mail service: Blockbuster Online. They eventually allowed online customers to exchange their online rentals for free in-store rentals. The company ended late fees. Blockbuster offered an excellent value, and customer service was pleasant. In short, Blockbuster was a pleasant place to rent movies, and people started realizing they did not hate Blockbuster anymore. Blockbuster basked in the goodwill of its customers for a while, but they must have realized happy customers are not necessarily profitable customers, because Blockbuster gradually began to return to its nasty ways.
With little or no warning, Blockbuster began hiking prices for existing online subscribers, reducing or eliminating in-store rental coupons, limiting in-store exchanges, etc. Blockbuster’s online (email-based) customer service has become an abysmal disgrace. Blockbuster keeps changing pricing structures and policies. Title selections in the stores have been shrinking for much of 2008. Availability of titles online has become a farce, and Blockbuster Online’s bafflingly bizarre shipping policies are placing considerable limits on subscription benefits. Most recently, Blockbuster reneged on their pledge to end late fees. Soon, we will probably see the Blockbuster store counter clerks once again become aggressive, rude, and rigid toward customers.
The root of all of this bad behavior is money. Blockbuster is a publicly traded business, and they are obligated to generate profits for shareholders. Unfortunately, Blockbuster has not managed to find a way to be profitable while keeping their customers happy. Blockbuster is obligated to pursue profit, but its customers are not obligated to supply that profit while tolerating the company’s disregard.
We used to hate Blockbuster, but they managed to be nice just long enough for us to stop hating them. Now, things are changing, and Blockbuster is beginning to show a renewed disdain for its customers. It’s not too late to get those feelings back. Maybe it’s time to start hating Blockbuster again.
Eventually, Blockbuster came to town. The store was bright, clean, and spacious. They had thousands of titles on the shelves. They were well organized, and everything was easy to find. Best of all, they carried dozens of copies of the most popular new releases. At last, you could have it all, and it did not even cost much more than Mom and Pop’s Video Gallery.
As time went by, the customers of Mom and Pop’s Video Gallery started defecting to Blockbuster, and Mom and Pop started feeling the squeeze of a shrinking customer base and declining profits. Since Mom and Pop did not understand economics, they tried to make up for the reduction in revenue by charging their small loyal customer base more money. It worked in the short term, but the loyal customers eventually stopped coming. One day, you drove by Mom and Pop’s Video Gallery and saw a sign that read, “Closing Sale - All Movies 50% Off.” A month later, the store was closed.
It was then you noticed Blockbuster was the only place around to rent movies. It was okay, at first, because Blockbuster had everything, and the prices were reasonable. Things began to change, however. Blockbuster started raising prices and started getting very strict about polices. The counter clerks started getting more aggressive, apathetic, hostile, and dismissive. It was not long before you realized that Blockbuster was the only game in town, and you were at their mercy.
Things got bad, and they just kept going down hill. You turned in some movies late and got hit with some hefty late fees. A Blockbuster employee forgot to scan one of your returned movies, and you were forced to pay for it. One time, your friend returned your movie for you and accidentally returned it into the wrong Blockbuster. As a result, Blockbuster charged you a ridiculous amount of money for transferring the movie back to the correct store. It was then you realized you hated Blockbuster.
You were not alone in your hatred for Blockbuster. Millions of customers across the nation had shared your experiences, and the resentment began to build. One by one, customers began to swear off Blockbuster forever. Some disgruntled customers started driving across town to one of the few remaining independent video rental stores, others starting just buying movies, some began returning to the theaters, others began subscribing to pay-per-view and premium cable channels. The vanishing customers, hurt Blockbuster, but Blockbuster’s market share was so tremendous, the company found it easy to make up for lost revenue by increasing fees on its remaining customer base.
The big change finally came in late 1990s. The newly created DVD-by-mail industry finally gave movie fans access to more movies, for less money, with more convenience, and fewer headaches. It took a few years, but Blockbuster began to feel the pain as DVD-by-mail companies began to spring up and chew away at Blockbuster’s once overwhelming share of the video rental market.
Perhaps the threat of obsolescence caused Blockbuster to have a change of heart, because the company suddenly started being nice again. Blockbuster store clerks started being friendly, helpful, and understanding once again. In 2004, Blockbuster launched their own DVD-by-mail service: Blockbuster Online. They eventually allowed online customers to exchange their online rentals for free in-store rentals. The company ended late fees. Blockbuster offered an excellent value, and customer service was pleasant. In short, Blockbuster was a pleasant place to rent movies, and people started realizing they did not hate Blockbuster anymore. Blockbuster basked in the goodwill of its customers for a while, but they must have realized happy customers are not necessarily profitable customers, because Blockbuster gradually began to return to its nasty ways.
With little or no warning, Blockbuster began hiking prices for existing online subscribers, reducing or eliminating in-store rental coupons, limiting in-store exchanges, etc. Blockbuster’s online (email-based) customer service has become an abysmal disgrace. Blockbuster keeps changing pricing structures and policies. Title selections in the stores have been shrinking for much of 2008. Availability of titles online has become a farce, and Blockbuster Online’s bafflingly bizarre shipping policies are placing considerable limits on subscription benefits. Most recently, Blockbuster reneged on their pledge to end late fees. Soon, we will probably see the Blockbuster store counter clerks once again become aggressive, rude, and rigid toward customers.
The root of all of this bad behavior is money. Blockbuster is a publicly traded business, and they are obligated to generate profits for shareholders. Unfortunately, Blockbuster has not managed to find a way to be profitable while keeping their customers happy. Blockbuster is obligated to pursue profit, but its customers are not obligated to supply that profit while tolerating the company’s disregard.
We used to hate Blockbuster, but they managed to be nice just long enough for us to stop hating them. Now, things are changing, and Blockbuster is beginning to show a renewed disdain for its customers. It’s not too late to get those feelings back. Maybe it’s time to start hating Blockbuster again.
12/24/2008
Could Redbox Mean the End for Blockbuster?
At one time, Blockbuster was the king of video rental; however, customer dissatisfaction grew along with the company’s market share, and, eventually, the DVD-by-mail industry was born. Netflix (a coincidentally despicable and dishonest company) capitalized on the growing number of irritated Blockbuster customers and developed a completely new way to rent movies. The service became popular and did massive damage to Blockbuster’s stranglehold on the video rental business.
Blockbuster has partially stayed alive by offering an online service comparable to Netflix. Like Netflix, Blockbuster’s online service is not very good and has angered numerous subscribers with dishonest business practices. The online service has proven to be a flawed venture for Blockbuster and will probably be discontinued or significantly overhauled at some point.
Blockbuster’s final hope for survival has been their online stores. Independent video rental stores have been scarce for several years now, so Blockbuster has been one of the few place people can visit to personally rent DVDs. Redbox may be the company who is about to change that.
Redbox (www.redbox.com), a company started in 2002 by McDonald’s Ventures LLC and now equally owned by Coinstar, poses a tremendous threat to Blockbuster’s stores. Redbox is a network of over 10,000 DVD rental vending machines (or kiosks), which are located at McDonald’s restaurants and drug stores around the nation. The vending machines are normally accessible 24 hours per day, every day of the year. They offer mostly new and recent releases for $1 per night. Basically, anyone with a credit card can go find a recent DVD at any time of the day for just $1.
The one thing Blockbuster had going for it was allowing for people to spontaneously rent new releases. Redbox offers the same option in more locations, with better hours, and at a much better price. Why would anyone drive four miles to rent The Dark Knight for $3 to $5 during rigid store hours, when one can simply drive two miles to rent the same DVD for $1 any time of the day?
If Blockbuster management is even remotely competent, they have begun plans to install competing DVD vending machines all over the country. If Blockbuster is not in even competition with Redbox by the end of 2009, Redbox and similar companies like The New Release (www.thenewrelease.com) and DVDPlay (www.dvdplay.com) are likely to tear into Blockbuster’s market share and drive the company down the road to obsolescence—a trip that is long overdue.
Blockbuster has partially stayed alive by offering an online service comparable to Netflix. Like Netflix, Blockbuster’s online service is not very good and has angered numerous subscribers with dishonest business practices. The online service has proven to be a flawed venture for Blockbuster and will probably be discontinued or significantly overhauled at some point.
Blockbuster’s final hope for survival has been their online stores. Independent video rental stores have been scarce for several years now, so Blockbuster has been one of the few place people can visit to personally rent DVDs. Redbox may be the company who is about to change that.
Redbox (www.redbox.com), a company started in 2002 by McDonald’s Ventures LLC and now equally owned by Coinstar, poses a tremendous threat to Blockbuster’s stores. Redbox is a network of over 10,000 DVD rental vending machines (or kiosks), which are located at McDonald’s restaurants and drug stores around the nation. The vending machines are normally accessible 24 hours per day, every day of the year. They offer mostly new and recent releases for $1 per night. Basically, anyone with a credit card can go find a recent DVD at any time of the day for just $1.
The one thing Blockbuster had going for it was allowing for people to spontaneously rent new releases. Redbox offers the same option in more locations, with better hours, and at a much better price. Why would anyone drive four miles to rent The Dark Knight for $3 to $5 during rigid store hours, when one can simply drive two miles to rent the same DVD for $1 any time of the day?
If Blockbuster management is even remotely competent, they have begun plans to install competing DVD vending machines all over the country. If Blockbuster is not in even competition with Redbox by the end of 2009, Redbox and similar companies like The New Release (www.thenewrelease.com) and DVDPlay (www.dvdplay.com) are likely to tear into Blockbuster’s market share and drive the company down the road to obsolescence—a trip that is long overdue.
12/23/2008
Video Games Are a Bad Play for Blockbuster
You have probably noticed that since the fall of 2008, Blockbuster has been making a major push to transform their stores to video game outlets. Shelf space for movies has decreased greatly and has been dedicated to the display of video games, consoles, controllers, and accessories.
Blockbuster has been renting out video games for years, and this always made sense, because there are not many game rental places around. Blockbuster’s move toward retail game sales, however, is puzzling. Many, many major retailers sell video games and gear, and it appears Blockbuster hopes to compete with these retailers. Some of these retailers are very big players. Why would Blockbuster want to sell products, which are readily available at stores like Walmart, Target, Best Buy, etc. for low prices? Furthermore, Blockbuster is competing with untold numbers of online retailers who can offer the very same products at lower prices, low or no shipping charges, and no sales tax. Since most gamers are very computer literate, ordering games online is second nature to a large portion of them. What makes Blockbuster think they can compete in such a competitive arena, and why would anyone buy video games and equipment from a big corporation with tiny retail stores?
There is a more complex long-term marketing problem here. If Blockbuster happens to get their movie rental customers hooked on video games, these new gamers will have less time and money to spend on movies. A movie-buying consumer will probably become bored with a $20 DVD after watching it for about four hours ($5 per hour of entertainment), but today’s video games are so advanced and complex, a person could easily spend a hundred hours playing a $50 game before getting bored with it ($0.50 per hour of entertainment). Why would Blockbuster want to convert movie customers who might spend $5 to purchase an hour of entertainment to gamers who are probably used to paying $0.50 for an hour of entertainment? The problem is even worse when looking at rentals. A movie watcher who wants to rent twenty hours of entertainment will need to rent about five DVDs. If that person becomes a gamer, one game rental will easily fill twenty hours with entertainment.
Blockbuster’s video game outlet transformation plan just does not add up. Blockbuster may be greedily going offer the booming market of video game sales, but they may be shooting themselves in the foot. Blockbuster needs to retain the movie fans who have been keeping them in business all these years, and Blockbuster certainly has no business competing in a market, in which they are way out of their league.
Blockbuster has been renting out video games for years, and this always made sense, because there are not many game rental places around. Blockbuster’s move toward retail game sales, however, is puzzling. Many, many major retailers sell video games and gear, and it appears Blockbuster hopes to compete with these retailers. Some of these retailers are very big players. Why would Blockbuster want to sell products, which are readily available at stores like Walmart, Target, Best Buy, etc. for low prices? Furthermore, Blockbuster is competing with untold numbers of online retailers who can offer the very same products at lower prices, low or no shipping charges, and no sales tax. Since most gamers are very computer literate, ordering games online is second nature to a large portion of them. What makes Blockbuster think they can compete in such a competitive arena, and why would anyone buy video games and equipment from a big corporation with tiny retail stores?
There is a more complex long-term marketing problem here. If Blockbuster happens to get their movie rental customers hooked on video games, these new gamers will have less time and money to spend on movies. A movie-buying consumer will probably become bored with a $20 DVD after watching it for about four hours ($5 per hour of entertainment), but today’s video games are so advanced and complex, a person could easily spend a hundred hours playing a $50 game before getting bored with it ($0.50 per hour of entertainment). Why would Blockbuster want to convert movie customers who might spend $5 to purchase an hour of entertainment to gamers who are probably used to paying $0.50 for an hour of entertainment? The problem is even worse when looking at rentals. A movie watcher who wants to rent twenty hours of entertainment will need to rent about five DVDs. If that person becomes a gamer, one game rental will easily fill twenty hours with entertainment.
Blockbuster’s video game outlet transformation plan just does not add up. Blockbuster may be greedily going offer the booming market of video game sales, but they may be shooting themselves in the foot. Blockbuster needs to retain the movie fans who have been keeping them in business all these years, and Blockbuster certainly has no business competing in a market, in which they are way out of their league.
12/22/2008
The Brazen Return of Blockbuster Late Fees
If you have visited a Blockbuster store in the last few days, you have probably noticed that Blockbuster has managed to eliminate the seven-day return grace period and slip late fees back onto the menu. The fees are not called late fees, but that is what they are. At Blockbuster stores, you now have the option of renting videos on a daily or weekly basis. (Although, it should be pointed out that Blockbuster thinks a week is five days.)
The daily rentals are less expensive than the weekly rentals, but both rates come with extra charges for each day the renter keeps a DVD beyond its return date. The weekly rate gives the renter a few extra days to return a DVD, but since it costs a couple of dollars more, choosing the weekly rate is effectively the same thing as choosing to prepay late fees at a discounted rate.
This most recent pricing structure is essentially a return to Blockbuster’s original pricing structure where customers rented videos for short time periods and then paid late fees when the videos were not returned by the deadline. The only significant difference is that the new structure effectively allows customers to pay their late fees in advance. The old late fee structure is one of the main things that customers used to hate about Blockbuster. It seems that this new structure also has the potential for angering customers who are not diligent about returning videos on time.
The good news is that Blockbuster’s new pricing structure is fair, in that it allows customers who wish to rent DVDs for only one night to do so at a lower price while still allowing others to pay more to keep DVDs for days. The bad news is this structure presents a significant problem for Blockbuster. A few years ago, Blockbuster spent a lot of time and money bragging about the end of late fees. If late fees were so awful a few years ago, how are they perfectly fine now? Certainly, many customers are going to see through this hypocrisy.
Another problem with this new pricing structure is that it reveals a considerable problem at Blockbuster. Blockbuster has made several major changes to their pricing and policies over the last five years, and they can just not seem to find a structure that is both attractive to customers and also profitable. Furthermore, the frequent changes at Blockbuster make rental prices and policies seem arbitrary and capricious. At some point, Blockbuster’s customers are likely to get fed up with all of the changes and seek out more stable and consistent alternatives for video rental.
The daily rentals are less expensive than the weekly rentals, but both rates come with extra charges for each day the renter keeps a DVD beyond its return date. The weekly rate gives the renter a few extra days to return a DVD, but since it costs a couple of dollars more, choosing the weekly rate is effectively the same thing as choosing to prepay late fees at a discounted rate.
This most recent pricing structure is essentially a return to Blockbuster’s original pricing structure where customers rented videos for short time periods and then paid late fees when the videos were not returned by the deadline. The only significant difference is that the new structure effectively allows customers to pay their late fees in advance. The old late fee structure is one of the main things that customers used to hate about Blockbuster. It seems that this new structure also has the potential for angering customers who are not diligent about returning videos on time.
The good news is that Blockbuster’s new pricing structure is fair, in that it allows customers who wish to rent DVDs for only one night to do so at a lower price while still allowing others to pay more to keep DVDs for days. The bad news is this structure presents a significant problem for Blockbuster. A few years ago, Blockbuster spent a lot of time and money bragging about the end of late fees. If late fees were so awful a few years ago, how are they perfectly fine now? Certainly, many customers are going to see through this hypocrisy.
Another problem with this new pricing structure is that it reveals a considerable problem at Blockbuster. Blockbuster has made several major changes to their pricing and policies over the last five years, and they can just not seem to find a structure that is both attractive to customers and also profitable. Furthermore, the frequent changes at Blockbuster make rental prices and policies seem arbitrary and capricious. At some point, Blockbuster’s customers are likely to get fed up with all of the changes and seek out more stable and consistent alternatives for video rental.
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