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Late Fees or Extended Viewing Fees: People Just Don't Like Them

19 May, 2003 By: Stephanie Prange

One of the biggest selling points of Flexplay's limited viewing disc, which self-destructs in two days, is the elimination of the late fee.

Flexplay last week announced a test of the disc with Buena Vista and prominently mentioned the no-late-fee advantage.

Flexplay isn't the only home video alternative to use this tactic. Wal-Mart often advertises the no-late-fee plus to purchasing a value-priced DVD, rather than renting it at the video store. Video-on-demand, pay-per-view and other non-packaged services have also attacked the traditional rental model on this basis.

Whatever you call the charge for bringing in a video after the appointed due date -- a late fee or the "extended viewing fee" coined by a certain rental chain -- consumers simply don't like it. It could prove to be the rental businesses Achilles Heel.

There is, however, another model using traditional packaged media that is catching on both online and in store that could eliminate the late fee as well -- the subscription model. Netflix's mail-order DVD rental business is built on it, and Blockbuster, in a nod to the growing online service, has been testing an in-store version.

While pricing and other factors may make this model less profitable than the old rent-and-return-on-time rental, video stores could soon find it's the right weapon to combat customer aversion to the late fee.

Some who support charging late fees have noted that car rental services aren't pilloried for asking customers to return that merchandise on time. But in that business, customers who need mobility really have few alternatives. Home entertainment is another matter. Many businesses are competing for eyeballs and anything the video business can do to keep those customers happy -- perhaps offering the subscription model as an option -- might be a good thing.

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