Blockbuster says it is eliminating late fees on games and movies as of Jan. 1. The giant movie-rental company portrays it as its gift to the American consumer but skeptics note the change is not without its fine print.

Instead of charging late fees, Blockbuster says that from now on, if customers don't bring a game or movie back on time, they'll be charged the purchase price less any rental fees they've already paid. Or they can return it within 30 days and pay only a "restocking" fee.

"Doing away with late fees is the biggest and most important customer benefit we've ever offered in our company's history," John Antioco, Blockbuster chairman and chief executive, said. "So as of the first of the year, if our customers need an extra day or two with their movies and games, they can take it."

"Blockbuster is a 20th Century business trying to survive for another few minutes while Amazon, TiVo and who knows what else corner the market on home entertainment," said James R. Hood, president. "Every Blockbuster store I've been in lately has been deserted."

Meanwhile, Antioco assured Wall Street investors the company has tested the program and found that "increased retail sales" -- including the purchase of overdue movies -- more than make up for the loss of late fees.

Blockbuster has been estimated to make $250 million to $300 million on late fees annually.

The company has more than 4,500 company-operated and participating franchised stores in the U.S.