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Posted by Black Locust on 12/22/57 11:25
Blockbuster Fights Back
Author: ERIK GRUENWEDEL
egruenwedel@questex.com
Posted: August 29, 2005
Blockbuster Inc., reeling from a disastrous second quarter and soft
rental market, will increase by $3 the two-titles-out in-store Movie
Pass subscription to $27.99 at select stores beginning Sept. 6. The move
follows a similar price increase for Blockbuster Online earlier this
month.
Blockbuster spokesperson Randy Hargrove downplayed the increase, saying
the company continually evaluates its numerous pricing plans.
³Even though we are adjusting the price on Movie Pass, we still think it
offers a terrific value for our customers,² Hargrove said.
The No. 1 video rental company also would appear to be jettisoning VHS
despite claims to the contrary. Calls to random Blockbuster stores
across the country revealed little or no VHS product available except
for select children¹s and Spanish titles and a consensus the format
was all but history.
³It¹s definitely phasing out,² said an employee at a Michigan
Blockbuster. ³It¹s basically down to kids¹ stuff.²
³Yeah, we carry a few [VHS],² said another Blockbuster staffer at a
store in Orange County, Calif. ³Well, wait not that many. Actually,
they are pretty much gone.² Hargrove denied Blockbuster was exiting the
VHS rental business. He said the company continued to determine product
mix as well as format mixes in each store based on customer preferences.
The elimination of late fees cost Blockbuster 15 percent in rental
revenue in the second quarter, according to a company filing a fact
that prompted scuttlebutt regarding possible reinstatement of late fees
at select stores.
About 515 franchise stores in the United States participated in the ³end
of late fees² program as of the second quarter, according to company
filings.
Blockbuster, which reported $9 million in quarterly revenue from related
sales and restocking fees of nonreturned rental product following
expiration of the 30-day return period, expects a surge of in-store and
online rental comps beginning in the fourth quarter.
Hargrove said the company had no plans to alter the ³end of late fees²
program, which he said in the first six months of the year had increased
rental activity among active members.
³Half of our franchise stores participate [in the no late fees¹
program], and that has been consistent since we launched the program,²
Hargrove said. ³For the other half, it is up to them whether they want
to participate or not. They are independent business people doing what
they think is right for their business and their customers.²
Rival Movie Gallery, which continues to charge late fees, has avoided
the media backlash directed at Blockbuster¹s use of the issue as a
marketing ploy largely due to its No. 2 status, said retail analyst
Dennis McAlpine with McAlpine Associates.
³I never heard anyone say Movie Gallery gouges the public because they
charge late fees,² said McAlpine. ³[Blockbuster was] damned if they did
and damned if they didn¹t.²
Credit: www.homemediaretailing.com
--
"Our enemies are innovative and resourceful, and so are we.
They never stop thinking about new ways to harm our country and our people,
and neither do we." - George Dumbya Bush
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