business news in context, analysis with attitude

We got several emails about our stories this week about the DVD rent-by-mail business, which is getting crowded now that Blockbuster and Wal-Mart have joined pioneer Netflix. Blockbuster was in the news a lot this week, since it settled a case that charged it with deceiving customers with a claim that it had no late fees – but actually was charging people’s credit cards once videos were kept past a certain point.

One MNB user wrote:

I rent a movie about once every three years. Yet I was fully aware of the provisions of Blockbuster's new no late fee program as I read it in the newspapers etc. and I am sure it is posted in their stores, on receipts etc.

Unfortunately we have a large segment of the population that cannot read very well and when they do read they do not understand very well what they have read. This segment seems to be more heavily represented among the frequent movie renters who probably rarely read a newspaper except to see what movies are playing. These are the same people who the government finds a need to protect with stupid warning stickers which of course they do not read either. Case in point, a man next to me at Shell the other day who was smoking a cigarette while pumping gas. There was a big "do not smoke" sign on the gas pump. Do you expect Blockbuster to verbally explain the details of their program to every person who checks out a video while the rest of us wait in line? Is it reasonable to expect Blockbuster to let you keep a video indefinitely for your one time $3.95 rental fee? Netflix does not do that. They charge you by the month and if you want to keep the same 3 movies indefinitely while paying them $18 a month I am sure they are more than happy with that deal. After the third month Netflix has their money out of those videos. You bought them but still don't own them. The Blockbuster situation is an excellent example of the principle that a good deed never goes unpunished.

We’ll have to agree to disagree about this. We think Blockbuster was very deceptive with its advertising…and we read just fine.

Another MNB user wrote:

I believe you're wrong on the "hoodwink" bit. I'm not a movie renter and haven't been in a Blockbuster for years but I heard about the charge based on buying the movie and the restocking fee shortly they hit the screens with their first ads about "No Fee".

There was no reason for me to hear this and retain it unless it was because someone was "bitching" about it when they found out, however they did. I don't think I heard about it 30+ days after the change in policy.

MNB user Virginia Leahy wrote:

I knew about the details of Blockbuster’s late policy right from the beginning. I immediately recognized it as a scam because only the phrase NO LATE FEES was highlighted. I will never rent from Blockbuster. Unethical behavior should not be rewarded.

Some comments related to yesterday’s story about Oregon considering regulating the junk food sold in school cafeterias and vending machines…as one MNB user wrote:

Kevin, how can you expect the vending industry to get on board. What is your next step, ask the legislation of this country in every state to withhold pension investments with manufacturers that make soda, candy, chips, cookies..etc. The problem is not the manufacturers or the middlemen industries. The issue lies with us, the parents! If you don't buy it the manufacturers will get the picture sooner or later, same with vending, if it sits in the machine long enough-things will change. But using state edicts is not the answer. Might as well throw every kid and parent that is overweight and not exercising in extreme workout camps.

Attack the problem.....parents and the involvement with their children with nutrition, but do you expect anything to happen when mom and dad are the size of a VW beetle, than where do you go?

And another MNB user wrote:

Studies show and plain old common sense would bring us to the conclusion that kids need good, nutritious food AND exercise. The finger pointing would be laughable except that it's not funny to think of the already evident consequences of the high rates of obesity, diabetes and impending heart disease in our populace - youngsters and oldsters. You've got to wonder what these lobbyists in Oregon are feeding their children! It's scary just thinking about it.

In a related story – about the enormous Burger King breakfast sandwich – one MNB user wrote:

Kevin, did you have a chance to look at these numbers?

One Enormous Omelet Sandwich from Burger King contains: (per their website)

730 Calories
420 Calories from fat
47g of total fat
17g of sat. fat
1 g of trans fat
415 mg of cholesterol
1860 mg of sodium
43 g total carbs
3 g dietary fiber
9 g total sugars
32 g protein

I took this line straight from their website: “Get out of bed and into a BURGER KING®. It's a great way to start the day out right.”

Yeah. Right into an early grave.

On the matter of the UFCW trying to unionize Target in Minnesota, one MNB user observed:

It's wise for the UFCW to target Target in the Twin Cities. This is where there best Super Targets operate and have the highest density of stores. Most do not have direct competition with Wal-Mart Supercenter, but rather old line supermarkets like Cub and Rainbow. Super Target, while not considered a
very strong performer in grocery, does seem to operate higher volumes in grocery in the Twin Cities and their sales reports are showing stronger percentage increases compared to the competition. If the UFCW does unionize Super Target, it might be harder for Wal-Mart Supercenter to enter the Twin Cities. While I don't recall the union ever benefiting the investors of any grocery chain, a unionized Target might be enough to scare Wal-Mart away. The worst humiliation for a retail chain is to get their clock cleaned by the competition on their home turf.

On the subject of M&M’s introducing Star Wars-themed candies, MNB user Jerry Quandt wrote:

Following the prostitution of Shrek by DreamWorks last summer, consumers and retailers will find that Star Wars (Lucasfilms) has done a great job of limiting promotional partners for this film release and really maximized the equity of the STAR WARS brand in an ownable way. The Shrek approach with went as far a green shampoo...I mean really...Shrek is bald! STAR WARS while activating well across the retail spectrum limited and targeted its partnership properties. It also demanded a lot form those partners in terms of activating the STAR WARS brand in a way that aligned with the brands tone and feeling. This is a lot to ask of a brand. Most of what we see activated is the simple borrowing of equity from partners. Not for this movie release so KUDOS to STAR WARS for doing it right!

I also found it interesting that the press releases mentioned licensed toy products found at specific mass retailers. Regardless of how this movie does, the Lucasfilm people seemed to have figured out what most of the major studios have not...How to get the most exposure out of a movie launch and then how to insure the interest remains between the film release and the DVD release.

Those of us in the industry know the major studios have been slow to understand the marketing power of retailers. To them it is still just a place to sell their titles not a platform to interact with consumers. Although this is changing slowly.

What these studios need to adopt is that retail is THE most effective place to engage consumers with your brand message. What is sexier or more appealing for a retailer and their consumers than the movies?!!!

Seems to me that these smaller labels have figured it will be interesting when one of the major studios gets the concept and activates it with any or all of the big retailers..because the little guys won’t stand a chance.

And MNB user Dan Raftery wrote:

Kevin, you missed the opportunity to laud Masterfoods for coming up with a great brand extension. They deserve a four pound bag full of credit for making the connection between dark chocolate and Darth Vader. You could stray off your good health path occasionally to recognize incidents of much needed creativity in the food business. Kind of like going to the dark side of commentary.

And we got a number of emails about the 200+ intellectuals who wrote a letter criticizing Wal-Mart.

One MNB user wrote:

I think the bigger question is, as the age-old philosophical question about the tree in the forest: "If 200 "intellectuals" denounce one of the largest non-government employers and no one is listening, does it make a sound?"

Another MNB user wrote:

Sounds like the chess club versus the basketball team. Two hundred people with high foreheads and patches on the elbows trying to tell a $300 billion dollar company that somehow they are "doing it all wrong."

There is a reason why these "intellectuals" are not working in the real world.

And yet another MNB user observed:

Now when have any group of intellectuals made sense when speaking as a group?

We will get a thousand and one "intellectual reasons" why Wal-Mart is wrong but not a single one will make sense when translated into common everyday English.

They should stay on campus where they can pat each other's backs at the University Club every evening after drinks and cigars.

Wow. We think we detect a little anti-intellectual bias here…
KC's View: