Blockbuster

History [edit]

A store every seventeen hours

David Cook, a Texas software entrepreneur whose previous business sold systems to oil companies, opened the first Blockbuster Video on 19 October 1985 in Dallas. His insight was databases: a computerised inventory of 8,000 tapes tuned to each neighbourhood, when the typical rental shop tracked a few hundred by hand.

Waste Management founder Wayne Huizenga bought in two years later and applied the same playbook he had used on bin lorries: buy the competitors, standardise, expand. At the peak of the expansion a new Blockbuster opened roughly every seventeen hours. Viacom paid $8.4 billion for the chain in 1994. In 2004 there were 9,094 stores and 84,300 employees, and Friday night at Blockbuster was simply what a film night was.

A large part of the profit came from late fees, which at one point brought in hundreds of millions of dollars a year. Customers hated them, and a class-action settlement over them cost the company $450 million in refund coupons. The resentment mattered later: the company that finally killed Blockbuster was founded, by its own telling, after a $40 late fee.

The fifty million dollar meeting

In 2000, Netflix co-founder Reed Hastings flew to Dallas and offered to sell Netflix to Blockbuster for $50 million. Blockbuster passed. The same year it signed a twenty-year video-on-demand deal with Enron instead, which ended when Enron did.

Blockbuster did eventually fight back properly. Blockbuster Online launched in 2004 and the Total Access programme in 2007 let subscribers swap online rentals in stores, something Netflix could not match, and for a moment it was winning subscribers faster than Netflix. But the campaign cost hundreds of millions, the company was carrying nearly a billion dollars of debt, and a proxy fight installed leadership that pulled back to the stores.

Chapter 11 and after

Blockbuster filed for Chapter 11 bankruptcy on 23 September 2010, with $900 million of debt, listing Netflix, Redbox and video on demand as the forces that broke it. Dish Network won the bankruptcy auction in April 2011 with a $320 million bid, kept a few hundred stores running, and on 6 November 2013 announced the end: the remaining 300 company-owned US stores closed by early January 2014, and the DVD-by-mail service stopped in mid-December 2013.

The last one

Franchise stores were not Dish's to close, and a handful carried on. After the store in Morley, Australia gave up in March 2019, the franchise in Bend, Oregon became the last Blockbuster on Earth. It is still open, part video shop and part pilgrimage site, and has appeared in a documentary and a Super Bowl advert since.

The domain today

blockbuster.com is still owned by Dish. It serves a single page that says "We are working on rewinding your movie" and points visitors at Sling TV, Dish's streaming service. The store in Bend runs its own site at bendblockbuster.com.