Blockbuster Online's Processing Decoy Tactic

It appears Blockbuster Online has begun favoring a particular throttling tactic. This one is the processing decoy tactic. Blockbuster will tie up your queue for an extra day by holding a DVD in Processing status overnight and then canceling shipment of the DVD the following morning. Here is an example of how it works.

1. On Monday morning, you have an empty slot in the At Home section of your Blockbuster Online queue.
2. Later that day, Blockbuster will move one of your most desired DVDs (normally one with an Availability status of Long Wait or Very Long Wait) to the empty slot in the At Home section of your queue. This DVD will be tagged as Processing.
3. The DVD will sit in your queue for the rest of the day and into the night with the status of Processing.
4. The next morning, the DVD will have mysteriously been moved from the At Home section of your queue back down to its original position in your list of desired DVDs. This leaves an empty slot in the At Home section of your queue.
5. Later that day, the empty slot will likely be filled with a different DVD from you queue. That replacement DVD is likely to ship that afternoon.

This throttling tactic is bad for you for two reasons. 1) The delay automatically adds at least one day to your turnaround, reducing the number of DVDs you can receive during the subscription month and thereby reducing the value of your subscription. 2) By holding one of your most desired DVDs in Processing status, Blockbuster is discouraging you from renting that title from another source for at least one day. You will probably not rent a DVD from a Blockbuster store, Redbox, etc. if you believe Blockbuster Online will be shipping that DVD to you in the immediate future.

Blockbuster might think they are being clever with this tactic, but they are only annoying subscribers. We all know Blockbuster Online generally knows whether it can ship a particular DVD or not. Those DVD envelopes and sleeves are barcoded and tracked through their inventory system.  Yes, sometimes returned DVDs arrive damaged or in the wrong sleeves or envelopes, but generally Blockbuster knows what DVDs it has in its shipping centers.  If Blockbuster is going to throttle subscribers, Blockbuster needs to stop playing games and just be straightforward with it.

Come on, Blockbuster, don't be such a tease. Just leave those shipping slots empty until you are satisfied with how much extra money you have milked from the subscribers. Irritating your last few loyal customers is not a good way to pull yourself out of bankruptcy.

Blockbuster's Blu-Ray Disc Rental Figures May Be Flawed

If you are a Blockbuster Online subscriber and you exchange your online rentals at stores for store rentals, you may have noticed that, sometimes, your store DVD rentals show up as Blu-ray discs in the At Home section of your Blockbuster Online queue. This commonly occurring error does not necessarily prove an inventory flaw; however, the error strongly suggests that Blockbuster inaccurately records some store DVD rentals as Blu-ray disc rentals.

If you do a lot of store exchanges and typically choose the DVD format, look in your Blockbuster Online rental history. There you may find several titles tagged with the [Blu-ray] tag. Depending on your rental preferences, you may notice that few or none of these supposed Blu-ray discs you rented from Blockbuster stores were really Blu-ray discs. They were just improperly tagged DVDs. Even more curious, this error seems to occur disproportionately often among new releases. Perhaps this is just a recent problem affecting only newer titles.

What is uncertain is whether or not Blockbuster is tagging discs inappropriately on purpose for some reason or if this is just another example of Blockbuster's incompetence. Regardless, many DVDs are being tagged incorrectly as Blu-ray discs in at least one system. If these errors are being carried over into other systems, such as the systems that provide data for inventory reporting and sales reporting, Blockbuster's numbers could be showing dramatically inflated figures for Blu-ray disc rentals.

There do seem to be stacks of unwanted Blu-ray discs just sitting on the shelves at Blockbuster stores. The excessive Blu-ray disc supply could stem from improper inventory reporting, or the improperly tagged discs could be concealing that Blu-ray discs are not terribly popular among Blockbuster store customers. Regardless, Blockbuster needs to get their act together and consistently tag DVDs as DVDs and Blu-ray discs as Blu-ray discs in all of their systems.

Imagine if you lost a store DVD that was electronically mislabeled as a Blu-ray disc. Would the store charge you the lower DVD price or the higher Blu-ray disc price? That could be an unpleasant surprise. If you lost the physical disc, you would have no proof it was a DVD, and you would be at the mercy of Blockbuster's inaccurate computer system.

Blockbusted: Blockbuster Files for Chapter 11 Bankruptcy Protection

Blockbuster has filed Chapter 11. This is barely news, because we have all been seeing this coming for a couple of years. The reasons for the bankruptcy are fairly obvious: debt, outdated business model, alienated customers, constantly shifting pricing structures, unpredictable rental policy changes, tainted brand, etc. The question should not be, "Why did Blockbuster go Chapter 11?" but "How did Blockbuster stay out of Chapter 11 for so long?"

Now, what does all of this mean for you? If you are a common shareholder, you are probably about to get screwed and lose your investment. If you are a customer, things are less certain. Chapter 11 is a reorganization status. Blockbuster is not shutting down at the moment, but the company is likely to spend the coming months trying to restructure their organization into a profitable business. Look for a lot of store closings, changes in policies, changes in pricing, changes in store inventory, and changes in ways of doing business. (Wow! That sounds like business as usual for Blockbuster.) Maybe these changes will benefit the customers. Maybe the changes will be a big headache for customers. The good news is that you have choices. If Blockbuster changes in ways you do not like, just go somewhere else.

This Chapter 11 filing gives Blockbuster one last chance to get things right. If Blockbuster can take advantage of this opportunity, they might be able to figure out a way to please customers while being profitable. If Blockbuster cannot figure out how to rehabilitate their business model, then the eventual end of Blockbuster in inevitable. We will just have to wait and see.

What Happens to Your Shares If Blockbuster Files Chapter 11 Bankruptcy

If you have been following Blockbuster in the news, you have noticed the bankruptcy talk is really heating up again. Frankly, it is stunning Blockbuster was able to survive all of the way through 2009, but they made it somehow. Well, it is 2010 now, and Chapter 11 seems like it could easily be in the cards for Blockbuster.

If you are a Blockbuster shareholder, you have probably been whimpering each time you have checked your portfolio during the last six years, but things can still get worse. If you are one of the unlucky investors still hanging onto Blockbuster shares, be aware those shares could possibly become worth absolutely nothing. If Blockbuster enters Chapter 11 bankruptcy, the common stock (probably the type of stock you hold) will be worthless. You will have no way to recover your money, and you will not be entitled to shares in the reorganized Blockbuster. In short, you, the common shareholder, will be left holding the bag (an empty bag). If you are concerned about losing 100% of your investment in Blockbuster, consult with your broker as soon as possible and explore your options. Maybe you can cash in those shares and have just enough money left for a few DVD rentals at that little, struggling independent video store in your town.

Here We Go Again: The Shipping Upgrade Excuse Is Back

If you are experiencing extended shipping delays on your Blockbuster Online account and you contact customer service about the issue, get ready for one of Blockbuster's favorite excuses. When you complain about delays, Blockbuster is going to claim they are in the process of implementing upgrades to their shipping process.

There is nothing new about this excuse. Blockbuster used it for an inexplicably long period of several weeks during the fourth quarter of 2009. This supposed shipping upgrade never really improved delivery much, but it sure did seem to slow down shipping for a while.

Here is the deal. Blockbuster is supposed to ship DVDs to you when you have empty shipping slots in your queue. If they are making changes that are resulting in shipping delays, that is Blockbuster's problem, not yours. If Blockbuster cannot ship DVDs to you when they should, they must compensate you with a refund, coupon, discount, etc. If Blockbuster tries to hide behind the inadequacies of their own system, demand compensation from them. You have a right to it, and Blockbuster owes it to you.