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Too lazy to return videos when you said you would? What part of rules do you not understand?

Not so fast, hall monitor. It's important to keep in mind that returning the video late is not like violating a contract or breaking the law. It's a value transaction just like anything else; and in fact, I would argue that late fees were likely a decent source of revenue for Blockbuster at one point. What Blockbuster did was adjust the late fee system to one that, in my opinion, backfired on them.

In the past, the late fees consisted of a small charge for each extra day you kept the video. That charge was a reasonable fraction of the original rental fee. So if you didn't get around to finishing your stack of videos, it was no big deal, you just return the ones you did watch and pay a little late fee for the rest. Or if you just happen to be an hour late? Again, no big deal, it's just an extra buck.

But now what they do is charge you for a FULL rental cycle (a week, for example) even if you're just an hour late. Now it costs you twice as much to be late instead of, say, 25% more. Yes, it probably reduced the incidence of people returning movies late. But look what good it did them?

I argue that they were making more money when they were being less punitive. It's not like it's particularly costly to them when a movie is late. In fact, when a movie is late, it's almost "free money" in a sense---they're making the same money, even more, per day that the video is out, but they didn't need an employee to ring up a new customer in the process. A bird in the hand...

Now again, it's not a matter of breaking rules. Blockbuster had a revenue stream in late fees, so they can't really complain. They just blew it.

Too lazy to return videos when you said you would? What part of rules do you not understand?

And what part of free market do you not understand? Netflix came out with a better business model that is far superior to the "punish our customers" model that Blockbuster tried to keep going. And Blockbuster is now getting hit for the mother-of-all late fees. Because they were late in changing their business model, they are now doomed.