Blockbuster CEO Tired of Being Butt of Jokes

Dec 15, 2004
George Anderson

By George Anderson

Blockbuster’s chairman and chief executive John Antioco didn’t think it was funny that the company’s policy of charging fees for the late return of movies and games was becoming fodder for late-night talk show hosts.

That’s why the company will eliminate late fees beginning Jan. 1.

Dennis B. McAlpine, an analyst at McAlpine Associates, said that’s not all Blockbuster will be getting rid of on that date and he doesn’t think Mr. Antioco and company will find anything to laugh about when the consequences of this decision become a bottom line reality.

According to The Associated Press, Blockbuster earns about 10 percent of its annual profits from the late fees.

Mr. Antioco believes the company can make up for the loss because customers unworried about late fees will rent more. Blockbuster, he said, is also focusing on controlling costs.

Mr. McAlpine thinks the Blockbuster chief is wrong. “What’s he getting, other than a warm fuzzy feeling in the bellies of his customers? That’s lost money. He’s not going to get that back.”

Moderator’s Comment: What impact will Blockbuster’s decision to drop late fees have on its business and the video and game rental market?

It should be noted that Blockbuster customers aren’t entirely out-of-the-woods when it comes to fees. The reality of the new program is that it gives customers
another week to return their rentals. If the customer fails to do so, then they will be charged for a purchase. Blockbuster’s new no-fee policy may wind up ticking off fewer people,
but those who do get a hit on their credit card are likely to be just as angry, if not more, than when they were being charged late fees.

George Anderson – Moderator

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