It's never too late to change your mind.

Blockbuster

(BBI) - Get Report

Tuesday said it is eliminating onerous late fees on movie and game rentals.

Blockbuster humorously referred to the decision as a New Year's resolution, but it could be the beginning of a seismic shift in an industry that has used the fees to control inventory and fatten revenue. The company estimates that late fees would have contributed approximately $250 million to $300 million to operating income in 2005.

Blockbuster said that in test markets the change in policy increased rental transactions, with retail sales offsetting the lower level of revenue resulting from eliminating late fees.

The move is also likely a measure to fight declining sales in the digital age. Indeed, the company cited "continued softness in the rental industry" in forecasting flat operating income in 2005.

Under the new policy, which becomes effective Jan. 1, customers get a one-week grace period at no additional charge. After that, penalties do apply.

"Doing away with late fees is the biggest and most important customer benefit we've ever offered in our company's history," the company said. "If our customers need an extra day or two with their movies and games, they can take it."

Shares rose 14 cents, or 1.6%, to $9.04 in the premarket.