Blockbuster Prices

Video stores used to rely on their virtual monopoly on the home video market to guarantee their profits. Consumers frustrated by the late fee policies or barren shelves of their neighborhood video store didn't have any other outlets to turn to. This was especially true in the early days of VHS tapes.

This single business model for watching movies at home led to the eventual dominance of one particular company, Blockbuster. Blockbuster's high prices were rivaled only by their Draconian late fee policy, which eventually resulted in a successful class action lawsuit being brought against the behemoth on behalf of consumers tired of paying through the nose for deceptive and inflated "extended viewing fees."

The Beauty of Competition

Entrepreneurs never stopped looking for ways to unseat Blockbuster from its crown, but it was not until technology caught up with frustrated consumer sentiment that this finally happened. Inexpensive DVD manufacturing costs and the rise of the Internet resulted in a new model for home video rental. Customers could now select DVDs from their home computers and have them delivered to their door for one monthly fee--with no late fees.

The public has been thirsty for such a revolution, as Blockbuster's recent policy changes should attest. The retail rental giant has stopped charging extended viewing fees (suddenly called "late fees" by the company for the very first time) and has even entered the online world of unlimited DVD rentals as well. Technology has leveled the playing field, however, and now Blockbuster has to compete on a equal basis with competitors eager to offer a higher level of service at a lower price.