How Blockbuster Went From Dominating the Video Business to Bankruptcy

But his livelihood is threatened when he gets a call from the store’s corporate overlords telling him that all the franchise locations have closed — except his. To survive amid the changing media landscape, Timmy and his staff must make significant sacrifices to keep their business and community thriving. For those born after the turn of the century, the teasing message is a callback to the “Be kind, rewind” glory days of the storied video rental chain, where many of us oldsters whiled away countless hours browning isles lined with VHS boxes.

In summary, Blockbuster’s reluctance to update their sales strategy is what eventually led to their demise. GameRush was positioned as a direct competitor to stores such as GameStop and GameCrazy. Blockbuster used its location status to get instant coverage; it also promoted these stores by hosting video-game tournaments, special trade-in offers, and a more ‘hip’ look to the selection and staff. However, when Blockbuster introduced the discontinuation of late fees, GameRush was put on the chopping block. While Blockbuster and its new boss, John Antioco, focused on brick-and-mortar video stores, technological innovations meant that competition was on the rise. In 1997, Reed Hastings founded Netflix, a DVD-by-mail rental service at the time, in part after being frustrated with a $40 late fee from Blockbuster.


The idea of penalizing customers to make money is a bad business model. A business should be creating a positive income source rather than a negative income source. Instead of charging late fees, they charge customers a daily rental fee up until a certain point and then the movie becomes theirs. Instead of late fees, people choose to pay extra rental fees instead.

  • In 1992, the company also expanded overseas when it bought out video-rental chain Ritz in the UK.
  • At its peak, Blockbuster had 9,000 stores globally and made $5.9 billion, but today the once-famous video rental company has shrunk to a single store in a small town.
  • It was a very tight network that could execute with extreme efficiency, but poorly suited to let in new information.
  • Stocked with at least 8,000 tapes, the store was much larger-scale than other video stores at the time, the website said.
  • But a cryptic message on has sparked rumors that the ill-fated video store might be staging a comeback.

After a few people tweeted that they had noticed the website was active, more nostalgic Blockbuster fans shared their theories about the website as well as their memories of picking out flicks and video games with their family and friends. Antioco’s article in Harvard Business Review describes what happened next. While he convinced the board to back his plan, one of his lieutenants, Jim Keyes, led a rear guard action. He pointed out that the costs of Antioco’s changes — about $200 million to drop late fees and another $200 million to launch Blockbuster Online—were damaging profitability. Some were reluctant at first, they actually liked being able to browse movies at the store and pick one up at a moments notice, but others jumped right in. And as more of their friends raved about Netflix, the laggards tried it too, fell in love with it and convinced people they knew to give it a shot.

Within a few years, Netflix and other competitors began to eat into Blockbuster’s profits, not by undercutting it, but by reimagining video rental in the digital age. Blockbuster was founded by David Cook, a software supplier in the oil and gas industry. After studying the potential of a video-store business for a friend, he realized that a well-franchised chain could grow to 1,500 units. And so the first Blockbuster store opened in Dallas on October 19, 1985. The last Blockbuster was the focal point of a 2020 documentary that explained the company’s downfall and the Bend location’s survival. The store is more of an attraction, making money by selling merchandise rather than renting movies.

The writers are David Caspe (Happy Endings, Black Monday) and Jackie Clarke (Superstore, Happy Endings). Long before the red envelopes came along, there were blue DVD cases. Some might consider the latter an ancient artifact, but not Timmy Yoon (Randall Park). As he says in the teaser for the upcoming comedy series, “I’ve been working here since the seventh grade.” He’s an analog dreamer living in a 5G world, operating the very last Blockbuster store in America.

On July 1, 2010, Blockbuster was delisted from the New York Stock Exchange. Its foray into video-on-demand streaming came too late, and over the next three years, Blockbuster died a slow and painful death. DVD-by-mail services stopped, its various partnerships folded, and stores worldwide were rapidly plunged into administration. The Blockbuster brand was sold to satellite TV company DISH in 2011 for $320 million, according to Variety. They owned the licensing rights and created Blockbuster On Demand, a library of thousands movies available to DISH customers and as a standalone app.

The company’s website appears to tease something new without giving away much information at all. When visiting the site, users are greeted with the company’s iconic ticket stub logo and the words “We are working on rewinding your movie.” Highlight your latest work via email or social media with custom GIFs. The Blockbuster brand is now owned by Dish Network, which scooped up the name back in 2011 for $320 million. Before we get too excited, we should note that the “new” message on the Blockbuster website may actually have been up for months, with dating its arrival back to November.

Customers could watch a video for as long as they wanted or return it and get a new one. When Hastings flew to Dallas and proposed his deal in 2000, sat atop the video rental industry. With thousands of retail locations, millions of customers, massive marketing budgets and efficient operations, it dominated the competition. So it’s not surprising that Antioco and his team balked at simply handing over the brand they had worked hard to build. After working in computer software, Cook decided to open his own video-rental store in Dallas, Texas.

It’s an accomplishment being the last man standing, but it sure doesn’t feel like a feat for the DVD enthusiast. For now, there’s no indication whether the messages on are just for fun or actually the start of a new venture–hopefully something more imaginative than just another cookie-cutter streaming site with a recognizable old name. The global number of Blockbuster stores is now (famously) down to a single location in Bend, Oregon. That store served as the inspiration for a short-lived series on Netflix, which was once David to Blockbuster’s Goliath. “The Blockbuster brand is not only nostalgic, but it’s a historic landmark in the history of film,” the DAO’s account tweeted in December 2021. “Despite its 1/1 brand recognition, the company was destroyed by terrible leadership with an inability to pivot and make dynamic business decisions.”