Hold The Popcorn
The world moves pretty fast. While just a few years ago we had to drag ourselves out to the movie rental store in the freezing cold if we wanted to vege-out, today it’s about as simple as pressing a button. Our ancestors would laugh at some of our problems today — not having anything to watch on a service with thousands of titles? Honestly, five-years-ago-us would probably agree.
The first Blockbuster store — housing 10,000 VHS and Beta tapes — was opened in 1985 in Dallas, Texas by David Cook. Although he began his career in the ever-lucrative oil industry, his wife convinced him that the video industry would be the next big thing. David quickly found success, and after building a $6 million warehouse in Garland, Texas, he began opening stores more quickly.
The early 90’s were a time of acquisitions and expansions for the company. They bought out rivals, music retail chains and other entertainment operations, which eventually led them to become a multibillion-dollar corporation. In 1991, when Time Warner announced they were upgrading their cable systems, Blockbuster’s shares dropped. In response, they decided to differentiate themselves by participating more in the entertainment sector. By investing in Viacom, opening a “Block Party Store” — an entertainment complex with restaurants, games and more — and tossing around the idea of a Blockbuster amusement park, they proved they were on the offense and ready to pounce on the smartest business strategy that could make them grow. In 1994, Viacom bought Blockbuster for $8.4 billion. Also in this decade, they expanded into the UK and Ireland markets by purchasing Ritz’s Video and Xtra-vision, respectively. Toward the end of the decade, they launched a successful rewards program and sold their music chain of stores.
The early 2000’s were a transformative and transitional time for the entertainment industry. People were looking for ways to enjoy films in more convenient ways. Blockbuster realized this, and knew they had to act fast. Netflix’s movie-by-mail service was gaining traction, and Blockbuster was struggling to come up with a viable competitive alternative to today’s premiere streaming platform. After famously turning down the chance to buy Netflix for $50 million in 2000, they partnered with Enron to help create a video-on-demand service. Enron terminated this partnership March of 2001, when they became worried Blockbuster wouldn’t be able to provide enough films for the service.
In 2004, Viacom spun off Blockbuster to become its own independent company once again. With over 9,000 locations in the U.S., they felt like the future was bright. As we know today, that bright future turned out to be pretty dark. By 2010, the number of stores nationally decreased from 9,000 to 3,425. After announcing a plan to close about 900 more, they detailed a plan to establish 10,000 “Blockbuster Express” kiosks to take on Redbox.
Soon after, their financials took a turn for the worse; they were delisted from the New York Stock Exchange and found themselves hundreds of millions of dollars in debt. On Sept. 23, 2010, Blockbuster officially filed for Chapter 11 bankruptcy protection. Dish Network bought the company in the middle of 2011 and tried multiple times to revitalize it, to no avail. If you still want to visit a Blockbuster today, there’s one left in America; you’d have to travel to Bend, Oregon to take a picture in front of the iconic yellow and blue accented sign.
What eventually led to Blockbuster’s demise? The obvious answer is seemingly Netflix, but upon closer inspection, that might not be the case. Today, a person can look at the situation differently than a business executive back in the 2000s. Yes, Blockbuster failed to pick up the red-enveloped startup that went on to surpass them, but it wasn’t for lack of thought. Late fees brought in money streaming couldn’t, and the sales made in the front of the store (candy, food, etc.) made up another chunk of revenue that would be lost if they resorted to different ways of distribution. Their short-lived partnership with Enron proved they were thinking ahead of the times, but for a multitude of reasons, they just weren’t able to dip their toe into the streaming services they desired to.
Whether it was poor executive decisions, fierce competition or spreading their business too thin, Blockbuster went from being one of the greats to… just about the opposite. All we can do now is sit back, relax, reminisce nostalgically for a bit, and then press the “watch next” on the Netflix app.
