The Rise And Fall of Blockbuster Video
Blockbuster was a massive part of almost every millennial's life. Many of us spent Friday nights endlessly wandering the aisles of the video store, searching for the best horror movies or the newest big hits to watch while eating our big bowl of popcorn. Who doesn't remember going in to pick up the new release movie you have just been dying to see, only to find it's all rented out, and you have to wait? Then you had to remember the due date because the last thing you wanted was to be charged those pesky late fees on a late movie return. Even though we all loved Blockbuster, most of us don't know about the behind-the-scenes work that went into creating the chain.
The First Blockbuster Store Opened Because Of Falling Oil Prices
David Cook, a Dallas, Texas entrepreneur, was still dealing with a collapsed oil market in 1985 when he, along with his wife, Sandy, came up with the idea of opening up a video store. He had previously been writing computer programs to manage inventory for big oil businesses until the market collapsed.
However, during that time, the VHS rental market was exploding. The married couple decided that the industry could use a mega-store, and Sandy came up with the blue-and-yellow color scheme. From there, Blockbuster was born.
Blockbuster Was The First Video Store To Keep Tapes On Shelves
Rental stores of the 1980s had problems with customers keeping the movies. As a result, they tried to discourage theft by placing an empty VHS box on the shelf, and then the exchange for the actual movie would take place at the counter.
However, Cook's started with eight thousand titles, making it impossible to have a back room for the movies. They decided to have the tapes on the shelves to allow for quicker customer turnover and an efficient inventory system.
There Were Never Adult Films At Blockbuster
Most video rental stores had a selection of adult movies, usually in a separate room or section of the store. However, Cooks decided right away that Blockbuster would not have an adult section and wouldn't rent out adult films.
"We just don't want to sell it to you. A lot of families came to our store only, not because of the selection and not because of the long hours, and not because of the convenient check-out and the three-day rentals; they came because they didn't mind their kids running around the store because they wouldn't see any garbage." ---- David Cook.
Blockbuster Was Sued By Nintendo
Blockbuster and other video chains capitalized on the resurgence of video games in the 1980s. However, Mario and Link were not willing to cooperate and were sticking to their reputation for stern business. In 1989, Nintendo sued the company for copyright infringement, stating that stores were photocopying game manuals.
Blockbuster said they were simply compensating for the worn-out originals. They ended up settling out of court, and by 1994, Nintendo had capitulated on its anti-rental stance.
Blockbuster Made A Fortune On Late Fees
Blockbuster made a fortune on late fees, which accrued after the one or three-day rental term had expired. Eight hundred million dollars, or sixteen percent of total revenue, came from fines in 2000.
They revamped their policies in 2004 to include that if a movie or game was more than eight days late, the customer was charged the full purchase price. If the customer returned the item within thirty days, the charges were reversed, but the customer was still charged a restocking fee.
Blockbuster Tried Becoming A Mini-Amusement Park
Blockbuster once tried to become a mini-amusement park. Cook believed that Blockbuster could be more than just a movie rental place when he named the company Blockbuster Entertainment in 1985. In 1994, they tried to open a center called the Blockbuster Block Party in Albuquerque, New Mexico.
It was an adult amusement park that featured laser tag, mazes, and motion simulator rides. It was referred to as a miniature Disneyland on steroids; however, the idea never caught on.
Blockbuster Music Stores Banned Male Employees From Having Long Hair
In 1994, Blockbuster music stores started banning male employees from having long hair and earrings. They were told that their hair couldn't be longer than two inches past their collars.
There were several workers that refused to comply and ended up being terminated. Those that were terminated wound up suing and the case was lost on appeal in 1998.
Blockbuster Got Exclusive Rights To Some Movies
In the 1990s, some big movie titles, such as Lolita in 1997, were exclusive only to the Blockbuster chain. That left smaller video rental shops unable to secure the movies for their own inventory. It prompted shops to buy from wholesalers who ignored the exclusivity rules.
Under this rule, companies such as Blockbuster and Netflix were able to rent out the movies they purchased without getting permission from anyone. This principle is known as the "first sale doctrine."
Blockbuster Advertised On Dry Cleaning Hangers
At one point, Blockbuster advertised on dry cleaning hangers. There were several businesses that placed advertisements on bags and clothes hangers in 1998. They also stapled coupons to the supplies.
This type of advertising was used because dry cleaner clients were typically very loyal, well-educated, and made decent money. It was a great way to reach that type of audience.
Blockbuster Turned Down Netflix
In 2000, Netflix CEO Reed Hastings met with Blockbuster to pitch the possibility of his company handling Blockbuster's online efforts. However, Blockbuster couldn't conceive of how Hastings could add any value to their already successful enterprise.
At the time, Netflix was just beginning its ascension into a DVD-by-mail and streaming giant. Hastings and Randolph offered to sell Netflix to Blockbuster for fifty million dollars, but Blockbuster turned them down. Several years later, it was Netflix that helped put Blockbuster out of business.
Blockbuster Later Mailed Netflix A Kitchen Sink
Eventually, Blockbuster started to feel the pressure from both Netflix and Redbox rental kiosks. So, in 2004, Blockbuster developed its own mail rental service.
Hastings later said in a conference call that Blockbuster had "thrown everything but the kitchen sink" at Netflix in an attempt to be competitive. The very next day, he received a kitchen sink in the mail from Blockbuster.
Blockbuster Tried To Buy Circuit City
In 2008, Circuit City was failing, and Blockbuster tried to arrange a buyout worth one billion dollars. They were in talks with Circuit City for months and sent CEO Philip Schoonover an offer of six to eight dollars a share in cash for the company.
Blockbuster stated, "It's not inconceivable to imagine a Blockbuster kiosk in your local Circuit City store, or Circuit City video game terminals residing next to the video game rental section in your neighborhood Blockbuster store." However, the electronics franchise went bankrupt the next year.
Vacant Blockbuster Stores Were In High Demand
When Blockbuster started closing down its stores and vacating its locations, the storefronts were in high demand by strip mall occupants. It wasn't a happy time for Blockbuster, but other stores were pretty pleased.
A pawn shop franchise bought many Blockbuster locations in Florida and Puerto Rico, and cell phone stores took up other locations. The locations were in prime foot-traffic spots.
Someone Noticed The Title Of The Last Movie Rented At Blockbuster
There were some independently-owned and in-name-only stores that were still open for business, but the last official Blockbuster Video location closed in November 2013.
The very last movie that was rented from a Blockbuster Video store was Seth Rogan's 2013 apocalyptic comedy This Is the End. There was a photo of the moment the last movie from the store was rented out, and it was posted on their Twitter page.
You Could Still Rent From Blockbuster In Alaska Until 2018
Even though Blockbuster went bankrupt and stores were closed, there were still Blockbuster locations in Alaska in 2018. Alan Payne, the licensee behind an Alaskan Blockbuster, stated that the store continued to turn a profit because internet access is expensive in Alaska.
That means that getting Netflix is very costly, and people chose to just continue renting movies instead of paying the high internet prices. However, later in 2018, stores in Alaska also closed down.
'The Last Blockbuster On Earth' Provides Funny Twitter Updates
There is a Twitter account named "The Last Blockbuster on Earth" that does a great job of trolling the video rental store. Nobody really knows who the account is run by, but people online debate whether or not it is run by a group of employees at the "Oak Lawn Shopping Center" location.
The people behind the account stated, "50/50 split between VHS and DVD rentals, most people come in to use our bathroom or hang out with Chas, a senior on the football team who works Tuesday and Thursday nights."
In 2004, Blockbuster opened a store inside a Blockbuster store called Game Rush. In addition, they acquired Rhino Video Games, a chain of video game stores in the Southwest, and renamed them, Game Rush.
Game Rush sold and bought games, DVDs, game consoles, and accessories. Blockbuster promoted the game store by hosting video-game tournaments and special trade-in offers.
Blockbuster Hated Independent Video Retailers
It is not shocking that Blockbuster hated independent video retailers, and they hated all of their rivals equally. It all started when H. Wayne Huizenga took over the company in the late 1980s.
He was a waste management magnate from Florida who reportedly felt that video rental places were "sleazy stores in bad neighborhoods." He did change his mind, though, when his friend took him to one of the Blockbuster locations.
Blockbuster Made A Lot Of Money On Video Game Rentals
Blockbuster had its fair share of ups and downs with video games, including being sued by Nintendo at one point. However, they stuck with it and ended up making millions of dollars with video game rentals.
At the time, the company's chief financial officer, Greg Fairbanks, said that video game rentals accounted for close to ten percent of Blockbuster's total revenue.
Blockbuster's Late Fees Inspired Netflix
Late fees were a touchy subject, and although they made Blockbuster millions of dollars, they made a lot of people unhappy. It was a hatred of late fees that inspired the creation of Netflix. Reed Hastings was the creator of Netflix, and he told Indiewire that when he returned a copy of Apollo 13 to Blockbuster six weeks late, he was shocked by the massive late fees he'd accrued.
The charge was so high that it pushed him to dream up a rental company that would not charge late fees and would allow the customer to keep a movie for as long as they wanted.
Blockbuster Music was a music store chain that Blockbuster owned, and the store sold CDs, music-related movies and shows, and music-related posters.
The first Blockbuster Music store was opened in 1992, and many were located adjacent to Blockbuster Video stores. The cool part was that you could listen to any CD while in the store. The music stores didn't last long either.
One Pacific Northwest Blockbuster Still Thrives
There is one Pacific Northwest Blockbuster that is still open and thriving. The video store is located in Bend, Oregon, and it is the last remaining location in America. It's almost like walking through a time capsule when you visit the store.
The store's computer system is even a throwback with floppy disks and old equipment. "It's very nostalgic. We have a bunch of 19-year-olds working here; it's fun explaining to them what a floppy disk is. Daily, we have people coming in and going, 'Oh my gosh. You're a Blockbuster. How are you still here?'"------- Sandi Harding.
The First Blockbuster Opened In 1985
David Cook opened the very first Blockbuster Video store in Dallas, Texas in 1985. The first store had about eight thousand VHS tapes to choose from.
In addition, it was one of the first retailers to utilize a computerized point of sale. The first store was opened in 1985, and by 1987, he had opened three more locations, and it just exploded from there.
Blockbuster Was Purchased By Viacom In A Massive Deal
Viacom is the media conglomerate that owns CBS, Paramount Pictures, and MTV. Viacom purchased Blockbuster in 1994 for about $8.4 billion dollars, which today would be $14.4 billion dollars.
In 1994, Blockbuster was the leader of the video rental market. However, Viacom later cut the company loose, and under the complicated buyback scheme, Blockbuster ended up borrowing millions of dollars.
Blockbuster Had Its Own Award Show
Blockbuster even had its own awards show called The Blockbuster Entertainment Awards. The awards show honored the most popular movies and stars that other award shows often overlooked. The awards were held annually from 1995 until 2001.
Award recipients included Reese Witherspoon, Keanu Reeves, Tom Cruise, and Jim Carrey. Sadly, the award show was canceled following concerns about viewership and celebrity attendance after the September 11th attacks.
The Company Experienced Rapid Growth In The Early 2000s
Blockbuster peaked in 2004 with what was called Blockbuster-mania, and there were more than nine thousand Blockbuster video store locations worldwide. They estimated that a new Blockbuster opened every seventeen hours.
It was around this time that Blockbuster announced its intention to pursue a hostile takeover of Hollywood Video. However, Blockbuster eventually withdrew due to FTC opposition.
Blockbuster Employees Had One Key Perk
Blockbuster employees had a few pretty awesome perks, and one of them was early movie rentals. They were able to watch and enjoy movies before anyone else was able to rent them. The employees were able to rent movies two to four weeks before the film's street release date.
They also were able to rent the movies for free. A previous employee stated, "This was actually a necessity because you'd have movie buffs and store regulars come in and ask for recommendations. It was a good way to catch up on movies I had missed or had never heard of. I definitely dug up some oddball gems this way."
Blockbuster Memorabilia Sells For Big Bucks On eBay
There are many people out there that are willing to pay a lot of money when it comes to collecting nostalgia. There is an entire market out there for Blockbuster memorabilia, and you can find a lot of it on eBay.
For example, vintage Blockbuster membership cards go for anywhere between five and two hundred dollars. Old merchandising stickers are priced at about nine hundred dollars, and a branded credit card pin pad has sold for forty-eight hundred dollars.
Blockbuster Eliminated Late Fees In 2005
Finally, in 2005, Blockbuster decided to eliminate its late fees. They did this to try and lure customers back into brick-and-mortar stores. Customers were given a one-week grace period at no additional charge, and if they kept the item longer, Blockbuster automatically sold them the product.
CEO John Antioco stated, "Doing away with late fees is the biggest and most important customer benefit we've ever offered in our company's history. So as of the first of the year, if our customers need an extra day or two with their movies and games, they can take it. Late fees are a thing of the past at Blockbuster."
Blockbuster Had A Subscription Streaming Service
Blockbuster finally gave in and started a subscription streaming service called "Blockbuster Movie Pass." Having the subscription meant the customer had access to DVDs delivered right to their door.
They also had access to stream movies online. The service cost ten dollars per month and it was Blockbuster's way to keep up with Netflix and other streaming services.
Blockbuster Filed For Chapter 11 Bankruptcy In 2010
Blockbuster officially filed for chapter 11 bankruptcy in 2010. Many people thought that the company went out of business because of Netflix but Tom Casey, former Blockbuster CFO, stated that Netflix wasn't to blame.
The real nail in the coffin was the 2008 financial crash that drew the bank dry and sealed the fate of the struggling franchise. Dish purchased Blockbuster in 2010 for three hundred and twenty million dollars.
Russell Crowe's Jockstrap Is At The Last Blockbuster
Blockbuster didn't go down without a fight. In a last-ditch effort to get more customers, they displayed a few pieces of movie memorabilia such as Russell Crowe's jockstrap used in Cinderella Man.
In addition, they displayed a director's chair used on the set of American Gangster and a vest worn in Les Miserables. The memorabilia was displayed at a Blockbuster Video store in Alaska and then later in a Blockbuster Video store in Bend, Oregon.
The Stock For The Last Blockbuster Still Standing Is Purchased At Target
In order for employees to keep the shelves stocked with all of the latest titles, every Tuesday, Sandi Harding takes a trip to the nearby Target to grab all the new DVD/Blu-ray releases.
Sandi has been the general manager at the Oregon Blockbuster Video store since 2004. If she can't find the movie she needs at Target, she goes on Amazon and orders it.
In 1986, Cook Expanded Blockbuster By Opening Three More Stores
As mentioned before, in 1986, Cook expanded Blockbuster by opening more stores. He started working in computer software and decided to open a video rental store in Texas.
His rental stores were different than others because they offered customers thousands of VHS tapes using a modern, computerized check-out process. It quickly became popular as it was the only way people could watch movies that were no longer in theaters without having to buy the VHS tapes themselves.
Blockbuster Employees Kept Secret Notes On Customers
Blockbuster employees were known for keeping secret notes on customers. The company used point-of-sale software that let employees look up their account information and leave little warnings for each other if you often tried to worm your way out of late fees or misbehaved.
"People would constantly complain about late fees, so we had a system where you could write a note on the computer, like 'Forgave one late fee, don't do it again,' or 'This guy constantly turns in tapes late and says he paid his fees.'" ------ Former Employee Mike.
Activist Investors With The Wrong Vision
Carl Icahn was an activist investor on Blockbuster's board who was against Blockbuster's move into the online rental business, preferring the company to stick with its brick-and-mortar roots.
He ousted John Antioco and installed Jim Keyes as CEO of Blockbuster in 2007. A former shareholder wrote that Keyes was the main reason Blockbuster tanked because he was in denial that his business model wasn't working anymore.
A Heavy Debt Burden
Blockbuster went under because of the whole fiasco when they had to take out a loan of nine hundred and five million dollars to pay for a dividend. When Blockbuster filed for bankruptcy, it was one million dollars in debt.
If it hadn't been for their massive debt, they could have succeeded and even beat out Netflix. Icahn later said that Blockbuster was the worst investment that he'd ever made.
Blockbuster Was Born From A Failure
When David Cook created Blockbuster, he was less interested in movies than he was in building enormous databases and solving complicated problems. A surplus of oil meant that prices plummeted, and oil companies started looking for ways to reduce their expenses, which meant no more fancy software.
Cook's business, Cook Data Services, went downhill, and he decided to switch paths. He wanted in on a fragmented market without dominant players, which ended up being video rental stores. As a result, Blockbuster Video was born.
H. Wayne Huizenga Took Over Blockbuster In 1987
In 1987, H. Wayne Huizenga took over Blockbuster, who was already a millionaire thanks to his company Waste Management. His company became America's largest waste disposal company in 1983. He was persuaded to invest in Blockbuster and invested $18.5 million with John Melk and Scott Beck.
However, there ended up being disagreements because Huizenga wanted to borrow money to open company-owned stores instead of franchising, and Cook was worried about taking on more debt. Cook eventually left Blockbuster, selling his shares for about twelve million dollars.
The Staff Had Exactly As Much Fun As You Suspected
Blockbuster employees had many perks, but they also had to deal with the usual perils of customer service, especially when it came to all the late fees. They also had to deal with increasingly out-of-touch corporate headquarters.
Most didn't really like the uniforms either, with the bright blue and banana yellow. There was also a group of male employees that sued Blockbuster for a 1994 policy that banned them from having long hair or earrings. However, they did get to watch a lot of movies before the rest of us were able to.
Several Blockbusters Were The Scenes Of Grizzly Crimes
Many Blockbuster stores were the scenes of horrible crimes because they were always open late and had plenty of cash. The theft was relatively common, but that was a minor issue. More seriously, many Blockbuster employees were assaulted and murdered in the 1990s and 2000s.
For example, Leon David Dorsey was charged with the murder of two employees in Dallas in 1994, and 1999. Matthew M. Jackson was found robbing and sexually assaulting two employees. In 2002, Donald Ray murdered two employees and two customers, and in 2001, Michael McGrath murdered an employee during a robbery.
Blockbuster Had A Cameo In One Of 2019's Biggest Movies
Blockbuster stores can be seen in some major films and in 2019 one of the biggest movies capitalized on the company's nostalgia. In Captain Marvel, Carol Danvers crash lands on Earth, right through the roof of a Blockbuster store.
The scene inside the store only lasted about ninety seconds, but it took a lot of effort to recreate the video store from 1995. Andy Nicholson said the most challenging part was finding VHS tapes, especially ones with the white covers that Blockbuster used.
Blockbuster's Late Fees Landed It In Court Several Times
Blockbuster's late fees angered most customers, but it also landed the company in court multiple times. In 2001, Blockbuster settled a lawsuit over a policy it had introduced the February before. Instead of charging the cost of the initial rental for every day past the return date, they would only charge the cost of the initial rental, no matter how late the tape was returned.
A class action lawsuit successfully argued that Blockbuster hadn't made the new policy clear enough. Then in 2005, the announcement that they had ended late fees landed them back in court. The reason was that Blockbuster didn't actually get rid of the late fees, they just rebranded the policy under the misleading title, No Late Fees. They were sued by all fifty states and D.C., and in March 2005, they settled with forty-seven of the states and D.C. for six hundred and thirty thousand dollars.
Blockbuster Tried And Failed To Save Itself From Bankruptcy
Blockbuster took way too long to adjust its business to meet customers' new expectations, but it still tried to stay away from bankruptcy. They started the rival online DVD-by-mail rental service, Total Access, in 2004, but it ended up costing the company too much money.
In 2008, they introduced their own streaming service, and in 2009, they introduced DVD kiosks. However, because of the company's massive debt, they just couldn't make it work.
One of Blockbuster's Most Well-Known Advertising Campaigns Was Launched In 2002 During Super Bowl XXXVI
Blockbuster had many advertising campaigns, but its most well-known one was launched in 2002 during Super Bowl XXXVI. The commercial starred the voices of James Woods and Jim Belushi as Carl and Ray, a rabbit and a guinea pig.
The rabbit and guinea pig were in a pet shop located across the road from a Blockbuster store. The campaign ended in 2003 but started back up again in 2007, with a commercial in the first quarter of Super Bowl XLI.
Michael Kelly, President
Keyes was replaced by Michael Kelly as Blockbuster's president. When Kelly took over, he stated, "Blockbuster can offer more movies to consumers in more ways than any other distributor.
I am excited to work with Blockbuster's dedicated employees and franchisees around the world to reinvigorate the iconic Blockbuster brand and allow consumers easier access to enjoy the more than 125,000 movie and game titles from Blockbuster's neighborhood stores by mail service and digital library." Kelly also founded Kelly Broadcasting Systems and was an Executive at DISH.
In 1993, Blockbuster Invested In The Indoor Play Center, Discovery Zone
In 1993, Blockbuster invested in Discovery Zone, an indoor play center for kids. They bought more stock in 1995 in order to take control of the company.
Unfortunately, Discovery Zone closed half of its locations in 1999 and sold others to Chuck E. Cheese. One single location is still open in Cincinnati, Ohio, but Blockbuster does not own it.
Blockbuster Sometimes Contracted With Studios To Obtain Early Access To New Titles
Blockbuster was known to contract with studios to obtain early access to new titles. They actually contracted with WWE, Rhino, Paramount, DreamWorks, Universal, Lionsgate, Summit, The Weinstein Company, Miramax, Touchstone, Disney, 20th Century Fox, and so many more.
Blockbuster was, at one time, an unstoppable giant that put many smaller video stores out of service. They put most of their focus entirely on what was new rather than on discovering film history.
In Late 1998, Blockbuster Launched A Loyalty Program
In 1998, Blockbuster launched a loyalty program called Blockbuster Rewards. It was another way to try and save the company. The loyalty program allowed customers to earn free rentals, which included one older title each month from the Blockbuster Favorites category.
The program went nationwide in 1999 and was successful. Everyone loves being able to earn free things. Unfortunately, nothing could save the company in the end, and now Blockbuster Video is a thing of the past.