Before Netflix, Disney+, and HBO Max, rentals were all the rage. People used to rent video tapes and CDs from Blockbuster to watch their favorite movies whenever they wanted. The chain was successful during its peak and earned millions in revenue. However, when Netflix came into the scene, Blockbuster failed to innovate over time. Before the company filed for bankruptcy, let’s look at how Blockbuster was THE video rental company for many Americans. Here’s our guide to the Rise and Fall of Blockbuster.
The Rise
Store Expansion
Blockbuster’s origins were established in Dallas, Texas. David Cook established Blockbuster on October 19, 1985. Texans were introduced to the newest video rental chain. The first-ever store had over 8,000 tapes for display and rental. It was a huge hit and an instant success! This was why the video retail chain expanded its operations to three more stores a year later.
In the same year as it expanded, the company went public, and Waste Management Inc. controlled Blockbuster. Wayne Huizenga was the founder and investor. Six years later, Blockbuster grew to 3,600 stores! Despite its growth, Blockbuster was sold to Viacom in 1994. In 1997, John Antioco took over the CEO role. He was well-known for his success running 7-Eleven and Taco Bell. By the time he took over the helm, Antioco had challenges ahead of him since Blockbuster was struggling.
CEO Replacements
In his Harvard Business Review article, Antioco shared that he was ready to take on the challenges of turning around a struggling business. He proposed a revenue-sharing system with Blockbuster paying $1 per copy sold, but 40% of the sales went to the studios. This was one of the reasons that Blockbuster became successful during Antioco’s tenure. Revenue reached $6 billion.
In 2004, he saw growth once again when they eliminated late fees. Three years later, John Antioco stepped down as CEO and welcomed Jim Keyes as its new CEO.
How Many Stores Did Blockbuster Have?
In total, Blockbuster boasted over 9,000 stores domestically and internationally, including Australia, UK, Canada, and Japan. However, their success was short-lived when a new competitor came into the market, which still remains a big player in the entertainment service.
The Fall
Competitors and Losses
In 2004, billionaire Carl Icahn invested in Blockbuster, buying its Class A shares. Despite this big win for Blockbuster, the company saw a huge decline during this period since Netflix and Redbox were its biggest competitors.
When Keyes became CEO in 2007, he knew he had to turn things around like his predecessor. However, he was CEO during the market crash. At this time, Blockbuster also had debt, which didn’t faze Keyes. He was able to sign a deal with Dish Networks for acquisition, but it lasted only until 2013.
The 2010s signaled a new era for watching movies and TV shows. As more people watched their favorite media, they relied on the internet more to watch instantly. They didn’t need to leave their homes to rent a videotape or CD.
That said, Blockbuster was witnessing its fast decline during this time. Before the 2010s decade even started, Blockbuster had already filed a Chapter 11 bankruptcy for restructuring and organizing. At this time, Netflix was already picking up steam as one of the leading streaming services. Additionally, Icahn cuts his stake. He sold his Class A shares in May but retained his Class B ones, which cost $3.3 million. However, he bought a chunk of Blockbuster’s debt, letting him control the company.
Not All is Lost
The video rental chain has only one existing store left. Bend, Oregon, is the proud city that houses the only Blockbuster chain after every store has closed down. Ken and Debbie Tisher own the remaining Blockbuster store in America. One reason this didn’t close is that it was franchise-owned rather than corporate-owned.
You can visit the store when you visit the Beaver State. However, if you can’t visit directly, you can buy Blockbuster merchandise for nostalgic purposes. Additionally, the Bend store was available as an “experience” on Airbnb in 2020. It was open from September 18 to 20. Even if it was held during the early days of the COVID-19 pandemic, many people booked an experience. It was complete with furniture and snacks, which was reminiscent of the movie-viewing experience in the 90s and early 2000s. It cost $4/night.
Ironically, Netflix green-lighted a TV show called Blockbuster. It was a comedy series starring Randall Park (Fresh From The Boat) and Melissa Fumero (Brooklyn Nine-Nine). Unfortunately, like its namesake, it didn’t do well on Netflix and was canceled.
Final Thoughts
Blockbuster was every American’s go-to place to rent video tapes for movie nights. The video rental retail chain saw success in its early days until 2004. However, due to a competitor that revolutionized the viewing experience, Blockbuster didn’t keep up with them and filed for bankruptcy in 2010. Not all is lost with Blockbuster since there’s one store keeping its legacy alive. Located in Oregon, it’s a place where many can “go back in time” and reminisce about the days of renting video tapes and DVDs to watch movies.
