Blockbuster[1] or Blockbuster Video was an American multimedia brand which was founded by David Cook in 1985 as a single home video rental shop, but later became a public store chain featuring video game rentals, DVD-by-mail, streaming, video on demand, and cinema theater.[2] The company expanded internationally throughout the 1990s. At its peak in 2004,[3][4] Blockbuster employed 84,300 people worldwide and operated 9,094 stores.[5]
Poor leadership and the impact of the Great Recession were major factors leading to Blockbuster's decline, as was the growing competition from Netflix's mail-order service, video on demand (including the Netflix streaming service), and Redbox automated kiosks. Significant loss of revenue occurred during the late 2000s, and the company filed for bankruptcy protection in 2010.[6][7] The next year, its remaining 1,700 stores were bought by satellite television provider Dish Network;[8][9] by 2014, the last 300 company-owned stores were closed.[10]
Although corporate support for the brand ended, Dish retained a small number of franchise agreements, enabling some privately owned franchises to remain open. Following a series of further closures in 2019, only one franchised store remains open, located in Bend, Oregon.[3][4][5][11][12] As of 2025, the company remains in existence under the name BB Liquidating, Inc., which gained notoriety in the GameStop short squeeze in 2021.
History
1985–1996: Founding and early growth
Blockbuster's beginnings can be traced back to another company, Cook Data Services, founded by David Cook in 1978.[13][14] The company's primary goal was to supply software services to the oil and gas industries throughout Texas, but it was very unsuccessful.[14] Sandy Cook, David's wife, wanted to get into the video business, and her husband would soon study the industry and future prospects.[15] Using profit he made from the sale of David P. Cook & Associates, the subsidiary of his company, he decided to buy into a video store franchise in Dallas known as Video Works. When Video Works would not allow him to decorate the interior of his store with a blue-and-yellow design, he departed the franchise and opened the first Blockbuster Video in 1985 under his own company Blockbuster Video Inc.[16]
Business model
The standard business model for video rental stores had traditionally been to pay a large flat fee per video, approximately $65, and offer unlimited rentals for the lifetime of the medium itself. Sumner Redstone, whose Viacom conglomerate then owned Blockbuster, personally pioneered a new revenue-sharing arrangement for video. Blockbuster obtained videos for little cost and kept 60% of the rental fee, paying the other 40% to the studio, and reporting rental information through the global media measurement and research company Rentrak. In addition to benefiting from a lower initial price, Blockbuster also capitalized on the fact that movies were generally not available for purchase at affordable price points during initial release periods. Thus customers had to rent, wait, or buy the film on tape at the much higher manufacturer's suggested retail price that was specifically targeted at rental chains for unlimited rentals and to a much lesser degree, film enthusiasts, which at that time ranged between $70–$100 per title.
Quantity and selection of titles
Blockbuster stores followed a strategy of emphasizing access to the most popular new releases, obtaining early access and stocking many copies of the new-release titles, with a relatively narrower range of selections than traditional independent video stores.[132] Much of the shelf space in the stores was devoted to popular titles that were placed relatively sparsely on the shelves with the entire front cover visible, so customers could browse casually and quickly, rather than having a more diverse selection with fewer copies of each title.
Other ventures
Blockbuster Entertainment Awards
Blockbuster Entertainment Inc. ran an awards show annually from 1995 to 2001 called the Blockbuster Entertainment Awards. In November 2001, Blockbuster announced that it would cancel the 2002 award show following concerns about viewership and celebrity attendance following the September 11 attacks.[139][140]
Blockbuster Express
Blockbuster Express was a movie-rental kiosk brand sublicensed for use by licensee NCR Corporation. In 2011, nearly 10,000 Blockbuster Express kiosks were in operation.[141][142]
International operations
North America
Blockbuster entered the Canadian market in November 1989.[152] The branch operated independently, and it initially remained financially stable.[153] In contrast to international Blockbuster franchises, Blockbuster had sold mobile phones when it began a partnership with Wind Mobile in December 2009 at all stores in cities where Wind's service was available. Phone sales began in Toronto and Calgary, later expanding to other cities with Wind coverage. Some stores even featured a full Wind "store-in-a-store" for postpaid activations and a larger selection of devices.[154] However, on May 3, 2011, it was announced that the company had gone into receivership.[155]
On May 25, 2011, it was announced that 146 stores, accounting for approximately 35% of the company's stores in Canada, would be shut down effective June 18, 2011.
Digital initiatives
In 1997, Enron Corporation had entered the broadband market, constructing and purchasing thousands of miles of fiber optic cables throughout the United States.[221][222] In 2001, Enron and Blockbuster Inc. attempted to create a 20-year deal to stream movies on demand over Enron's fiber optic network.[223] However, the "heavily promoted" deal fell through, with Enron's shares dropping following the announcement.[223]
In response to the rising popularity of mail-order DVD rentals pioneered by Netflix, Blockbuster launched its Blockbuster Online service on August 11, 2004, providing nationwide by-mail DVD rentals. The service offered unlimited rentals for a flat monthly fee, initially priced at $19.99 for up to three DVDs at a time.[224]
Advertising
Super Bowl
One of Blockbuster's most well-known advertising campaigns was launched in 2002 during Super Bowl XXXVI. It starred the voices of James Woods and Jim Belushi as Carl and Ray, a rabbit and a guinea pig in a pet shop located across the road from a Blockbuster store. The first campaign ended in 2003. The Carl and Ray campaign started again in 2007 starting with a commercial in the first quarter of Super Bowl XLI.[256]
Misleading advertising
In 2005, Blockbuster launched a marketing campaign describing changes in its late fees policy and offering "No Late Fees" on rentals. The program sparked investigations and charges of misrepresentation in 48 states and the District of Columbia: state attorneys general including Bill Lockyer of California, Greg Abbott of Texas, and Eliot Spitzer of New York argued that customers were being automatically charged the full purchase price of late rentals and a restocking fee for rentals returned after 30 days. In a settlement, Blockbuster agreed to reimburse the states the cost of their investigation, clarify communication to customers on the terms of the program, and offer reimbursement to customers charged fees prior to the clarification.
Presidents and CEOs
- John F. Antioco, CEO: 1997–2007
- James W. Keyes, CEO: 2007–2011
- Michael Kelly, president: 2011–2015[264]
See also
- Circuit City
- GameStop
- Dish Network
- Family Video
- Gamerang
- Hollywood Video
- Movie Gallery
- Netflix
- Retail apocalypse
- List of retailers affected by the retail apocalypse
External links
References
- Bijan Stephen. The last Blockbuster: what we really lose when video stores shut down The Verge, August 29, 2018, retrieved April 19, 2019^
- John Hecht. Blockbuster opening Mexico multiplex The Hollywood Reporter, WordPress.com VIP, April 28, 2007, retrieved September 23, 2023^
- The Sad End Of Blockbuster Video: The Onetime $5 Billion Company Is Being Liquidated As Competition From Online Giants Netflix And Hulu Prove All Too Much For The Iconic Brand