Blockbuster: The Defunt Giant


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The Beginning

The story of Blockbuster starts in 1978. At this time, it was known as Cook Data Services. David Cook, for which the company was named, created it to supply software services to the oil and gas industries throughout texas. However, this was not a successful business. Only when Cook's wife Sandy told him of her idea to get into the video business did the classic image of Blockbuster form. David, using the profit he received from the old business, bought a video store named Video Works. However, Video Works did not want David to paint the store in its classic blue and yellow color scheme, and so David left and opened his own store in 1985. The first store contained over 8000 VHS tapes and 2000 beta tapes. David's previous experience helped him to manage the company effectively and he opened a 6 million dollar wearhouse to help with operations. The initial Blockbuster process involved tailoring the store's inventory to the local neighborhood. Then came Nintendo. The gaming company was notorious for reinventing the video game market in the United States, but their strict guidelines led to various issues. One of these issues was video game rental. Nintendo believed that renting video games took away profit and paved the way for hacking of the system. Blockbuster took them to court in 1987 where they won, allowing video game rentals across the country. In the same year, Waste Management co-founder Wayne Huizenga purchased Blockbuster, having reservations to enter the video industry. In 1990, the company bought video rival Erol's which had over 250 stores. They also acquired various music companies and created a subsidiary known as Blockbuster Music. Soon, they were opening stores every 24 hours, buying various other competitors in the market. Blockbuster had become a multi-billionaire company, but Huizenga was worried about how new technology could threaten the video rental business, with the introduction of cable and video on demand. In 1991, time warner announced that they would update their cable system. At the same time, Blockbuster's shares had dropped more than 10 percent. Huizenga had many ideas to expand Blockbuster, such as an amusement park, a cable system, and the purchase of Viacom. However, he backed out of every one, and later sold the company to Viacom in 1994 for $8.4 billion dollars. Viacom agreed to buy the company in order to help them in their battle against QVC. After this deal, the company shares rose back up, and it was worth 4.6 billion. In 1996, the name was changed from Blockbuster video to simply, Blockbuster. In the same year, Blockbuster relocated their headquarters from Fort Lauderdale, Florida, to Renaissance Tower in Dallas. Many workers in Florida who refused to move were offered gifts in exchange for their loss of jobs and new workers were hired in Dallas.

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1998 - 2007

In 1998, DVDs were emerging as a new video medium. Warner Brothers offered Blockbuster an exclusive rental deal that would allow for the general public to rent movies before they went on to other stores for full sale. Blockbuster declined this offer, which led to Walmart taking the deal instead. At this time, Walmart surpassed Blockbuster as Warner Bros' highest place of revenue. In late 1998, Blockbuster launched the Blockbuster Rewards Program, which allowed for a person to get a free rental video every month. In 2000, Netflix, a video company founded in 1997, offered to be sold to Blockbuster, but Blockbuster turned them down. In 2004, Blockbuster spun off from Viacom and launched an online video rental service service. They also began movie and video game trading in select US stores. At its peak in 2004, Blockbuster had over 9000 stores. They announced officially that they were to make an offer with current competitor Hollywood Video. They were unsuccessful in purchasing the company however, due to resistance from the FTC. In 2005, financer Carl Icahn fought to add himself and two other members to the board. He also claimed that Blockbuster overpaid the current CEO, John Antioco. Antioco scrapped late fees and wanted to keep the company independent, while Icahn wanted to sell the company to a private equity firm. Also in 2005, Blockbuster ran a controversial campaign titled "No more late fees!" which charged the buyer the full price of a movie or game if it was past the due date. More than 40 states filed claims against the company, who promised a full refund for everyone and apologized for the confusion. In 2007, Blockbuster released Total Access, a strategy against Netflix. Customers could rent a video online, and then return it to the store to receive a free movie. With this successful strategy, Netflix approached Blockbuster again with a purchase offer. Blockbuster once again declined the offer due to the company being small. Around this time, Antioco was pushed out and replaced with James Keyes, who removed the Total Access feature. He was the one who declined the second Netflix offer. In the middle of 2007, Blockbuster announced that they would replaced DVDs with Blu-Ray discs instead. They offered blu-ray in 250 stores.        

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2011 - The Present

 At the beginning of 2010, Blockbuster decided to close 600 of its stores to make way for Blockbuster Express, a small kiosk that would provide rental movies. At this time, over 40 million households had Blockbuster memberships. In late 2010, they closed all of their stores in Portugal, claiming that internet piracy and a lack of response to it led to the closure of stores there. In the following months, blockbuster introduced a system that fined customers for a late movie, a process that already existed in other countries. During this time, more an more of the blockbuster stores were also closing down. In 2011, Blockbuster was preparing to file for bankruptcy, when a savior came from an unexpected source. An international video company planned to buy blockbuster, but Dish Network bought the company for 320 million dollars on the promise that they would be able to pay everything back. This deal would save the company temporarily. 90 percent of the remaining stores would stay open and would lead to Blockbuster introducing a new service called Movie-Pass. This service was a merger between blockbuster and dish where you could sign up to get movies through the mail. This service would end up being unsuccessful for the two companies. 

In 2012, 300 stores would close, with the blockbuster website stating that 51 stores remained open for business. Dish planned to introduce a Netflix competitor (Netflix had grown to the size that it is today) but it fell through and was canceled. In 2013 - 2014, only 51 stores were still open. Despite the small amount of remaining stores, Blockbuster persisted releasing a Dish online streaming service into 2015, but poor leadership led to this being canceled as well. 50 of the 51 remaining stores closed down, and as of 2019, 1 store still remains in Bend, Oregon. This store is privately owned, meaning that Blockbuster does not actually own it as a building. While some might say that the digital business led to Blockbuster's downfall, in reality, it was the company itself. 

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