I figured out Blockbuster. First they arrange with the movie studios to pay a percentage on the rentals rather than paying up-front for the tape and keeping all rental fees. This way their inventory cost becomes irrelevant, because the cost for them to have 1 copy of a video is about the same as the cost of having 20, since they only pay when it is rented. Then they spring the 5-day rental on you. Because they can get an unlimited number of videos for no extra cost, it doesn't matter to them that the videos are out most of the time because their return on investment is the same. However, the 5-day rental makes it easier to be late, because you think you have plenty of time to return the video, where with a 2-day rental you are always conscious of the need to return the video. As a result, Blockbuster collects more late fees. Their costs stay about the same but their revenue increases due to late fees. And yet in selling it to you and the movie studios, they make it sound better for you than for them. Pretty clever, no?