Blockbuster Video is an American multimedia brand and former video rental store chain. It was founded by David Cook in 1985 as a single home video rental shop, but later grew into a national store chain featuring video game rentals, DVD-by-mail, streaming, video on demand, and cinema theater.
His company was different from other rental stores because it offered customers a selection of 8,000 VHS tapes with the help of a modern, computerized check-out process, while other, smaller rental stores could only offer a couple hundred movies.
It was able to offer a greater selection of titles, lower prices, and convenience to its customers. Blockbuster also invested heavily in new technologies, such as DVD and VHS players, which allowed them to offer customers the latest releases. However, Blockbuster's success was short-lived.
Blockbuster reached its peak in the year 2004, earning $5.9 billion in revenue despite the increasing popularity of Netflix and other online video rental services. But the rental service was already years behind its competitors.
The company failed to recognize the changing preferences of consumers and was slow to invest in digital streaming platforms. By the time Blockbuster tried to catch up, it was too late, and competitors had already established themselves as dominant players in the market.
Netflix sued Blockbuster last year, saying its larger rival had stolen its system for placing movie selections in a queue and its business method for charging subscribers a monthly fee to select and rent DVDs from its Web site.
Blockbuster competitors include Outerwall, Redbox, Cummins-Allison and The Best of Netflix. Blockbuster ranks 1st in Employee Net Promoter Score on Comparably vs its competitors.
On July 1, 2010, Blockbuster was delisted from the New York Stock Exchange. Its foray into video-on-demand streaming came too late, and over the next three years, Blockbuster died a slow and painful death.
In 2010, Blockbuster filed for bankruptcy. As locations around the world closed, the location in Bend held on and became the last remaining store in operation in 2019. Now, it's a fully operational video-rental store (and nostalgia museum of sorts) that's open seven days a week.
Blockbuster's failure to adapt to emerging technologies and changing consumer behaviours played a crucial role in its decline. The company failed to recognise the potential of the internet and digital technology in transforming the entertainment industry.
One of Blockbuster's current advantages over other rental stores is its “No Late Fee” policy, so if they brought late fees back there wouldn't be much to keep Blockbuster customers from going to another rental store with late fees that charges two dollars less per rental.
Both were driven into bankruptcy because they failed to adapt quickly enough. A series of poor choices by Blockbuster, including passing on the acquisition of Netflix for a mere $50 million, led the company to file Chapter 11 to reduce its roughly one billion dollar debt.
John Antioco, then Blockbuster's CEO, dismissed the offer, considering Netflix a niche business and downplaying the significance of the dot-com era. In hindsight, Antioco's skepticism about the dot-com bubble was justified, as its subsequent burst demonstrated.
Business growth was accelerated by adding a franchising scheme. The aggressive growth was supplemented with acquisitions of other store chains. The same successful formula was copied internationally, with acquisitions and growth in the United Kingdom, Australia, Japan and other countries.
It failed because of too much debt and changes in the industry. It had too many stores, Netflix created a better business model, and then Redbox kiosks and the whole digital phenomenon eliminated the need for consumers to go to a separate DVD store.”
The term 'blockbuster' derives from the word used to describe large-scale bombs used in World War II. The concept of a film with major box-office impact arose during the war and the term was initially used for films of this sort, and particularly for big budget productions in the late 1940s and early 1950s (... ...
John Antioco was born and raised in Brooklyn, New York. His father was a milkman, whom Antioco would sometimes accompany on his morning delivery route. He is a graduate of the New York Institute of Technology, where he earned a B.S.
By 2010, Blockbuster was forced to file for bankruptcy after still being unable to pay off its roughly $1 billion in debt six years after the spin-off from Viacom.
Since Blockbuster's primary source of income was from penalizing its customers, the strategy did not last long. With the changing market conditions, the demand for online streaming increased among consumers in the late 20s. However, Blockbuster ignored customers' preferences by not shifting to online streaming.
Instead of bleeding customers dry with late fees, they could have increased revenue the old fashioned way by growing revenue through offering a better product.
Marc Randolph, who cofounded Netflix with Reed Hastings in 1997, this week recalled some key moments in the company's history, in light of the company launching its website 25 years ago today. One of them: In 2000, the two tried to sell their startup to Blockbuster for $50 million. They were flat-out rejected.
DISH Network acquired the assets of BLOCKBUSTER in April 2011 through a bankruptcy auction. We recognized that the entertainment landscape was changing, and we believe that Blockbuster will continue to evolve its online delivery.
Netflix's co-founder took to LinkedIn to share an awkward encounter with Blockbuster in the 2000s. Marc Randolph said the Blockbuster team tried not to laugh when Netflix pitched a $50 million partnership. Netflix is now worth $149 billion and had 230.75 million subscribers as of the end of 2022.
It's hard to argue that technological shifts didn't kill Blockbuster. After all, most of the rental industry collapsed with it. Following Blockbuster's failed bid to buy Hollywood Video, rival Movie Gallery took it over, and both chains shuttered in bankruptcy around when Blockbuster filed.
