It's hard to tell what to make of Blockbuster (NYSE: BBI) re-instituting their late fees policy, but that has now been implemented as of March 1, while the company struggles to survive as revenue continues to plunge at the movie rental company.
The policy changes from their previous policy, where their customers were given a grace period of 10 days before being charged a $10 fee.
Now the policy won't go beyond $10, but instead of waiting for a 10-day grace period, the new fee will be applied per day up to the 10 days, so customers will have to pay from the first day they're late with their rentals.
Another thing Blockbuster customers need to know is the period they can rent a movie has fallen from seven days to five days, which means after five days the $1-a-day fee begins for them. This is in regard to new release movie titles rented for $4.99.
Other rentals the $1 daily fee will be applied to are Blu-ray Disc films which are previously viewed, and also standard DVD rentals for one day.
This is better than their highly unpopular late rental fees in the past which could add up forever if the movie wasn't returned, so the cap of $10 on the late fee isn't bad in that regard, and would largely pay for the physical disc when it's bought by the company for rental.
Blockbuster is in the midst of attempting to compete with their major competitors by going to a multi-platform distribution business model, something they were far behind with as other surpassed them, pretty much destroying the former business model for them that had propelled them to success.
What this will do is give the company some much needed revenue while they attempt to make the changes to distribute on the Internet, which is really what this is all about more than anything else, although low-cost competitors charging only $1 a movie are another challenge they must face if they're going to make it in the industry and survive as a company.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com