Blockbuster Video – Phenomenal Success, Missed Opportunities

Blockbuster Video was launched in 1985 by David Cook and his wife, Sandy, in Dallas, Texas. In history, video rentals of VHS and Betamax tapes began at the end of the 1970s. Over the nearly three decades that followed, various versions of the Blockbuster name grew internationally to more than 9,000 stores, employing more than 80,000 people. In the early 2000s, Blockbuster served over 65,000,000 customers. Today, it has been well documented that the only remaining blockbuster store in the world exists in Bend, Oregon. The Blockbuster story is one of phenomenal growth, missed opportunities, failure to keep up with changing technology, crippling debt, late fees, and overall bad luck.

Early Times

In the early 1980s, David Cook sold his software business targeting the oil and gas industry to invest in a video rental operation named Video Works. Soon, wanting to promote his own concepts, Cook left Video Works in 1985 and opened the first Blockbuster Video store in Dallas. His eye was always on rapid growth, and early on he created a large warehouse in nearby Garland, Texas. By 1987, Wayne Huizenga, the co-founder of Waste Management, became a significant investor in Blockbuster. Huizenga brought significant capital as well as management skills to the operation.

David Cook exited Blockbuster in the late in the late 1990s and has made a maintained a low profile ever since. Over the years, there have been many other “cooks” in the kitchen at Blockbuster. The company went public and drew the attention of such corporate raiders as Carl Icahn. In 2000, Blockbuster’s then CEO, John Antioco, passed up an opportunity to buy Netflix for $50 million. Netflix went on to have a net worth surpassing $16 billion.

Poor Partner

Blockbuster was not unaware of the possibility of video on demand. It entered into a joint venture to create a streaming service in the year 2000. Unfortunately, the partner it chose was Enron, which went bankrupt the following year.

Blockbuster’s business model predated the more compact-sized DVD, which Netflix was able to offer in the mail without late fees. Remember “Be kind, rewind.”? Late fees were A problem for blockbuster interns in terms of public relations. Netflix offered the opportunity never to pay a late fee, but rather not to receive your next movie until you returned the one you already have. Meanwhile, you pay the same monthly subscription fee. It is ironic that the movie industry has gone from the single-viewer kinetoscope to the multi-plex, and now back to the single audience again.

As Internet bandwidth improved, streaming services did in fact make their impact. Today, Comcast Xfinity and Netflix itself are examples of the success of video on demand. Blockbuster simply did not keep up with the times. Coupled with excessive debt, The Blockbuster name essentially disappeared in 2019.

Timeline

Here is a timeline for Blockbuster:

1985-1994: David Cook founded Blockbuster Video in 1985 and grew it into a chain of video rental stores. In 1994, he sold the company to Viacom for $8.4 billion.

1994-2004: Viacom owned Blockbuster for a decade and expanded the company’s presence globally. In 2004, Viacom spun off Blockbuster as a separate public company.

2004-2010: Blockbuster operated as an independent public company for six years, but it struggled to compete with new digital technologies and online video streaming services like Netflix. In 2010, Blockbuster filed for bankruptcy.

2010-present: Dish Network acquired Blockbuster’s assets in 2011 for $320 million and continued to operate some of the company’s remaining stores under the Blockbuster brand. However, by 2019, the last few remaining Blockbuster stores had closed, and the company effectively ceased to exist.