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Frank Olito and Alex Bitter
Updated
- Blockbuster grew from a single store in Dallas to a chain of 9,000 locations over two decades.
- But mistakes, such as declining to acquire Netflix when it was just a startup, led the company to go bankrupt and close almost all of its stores.
- Recent website changes have some speculating about a possible comeback. Here's how Blockbuster went from a retail force to a nostalgic memory.
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David Cook opened the first Blockbuster in 1985.
After working in computer software, founder David Cook decided to open his own video-rental store in Dallas, Texas. His company was different from other rental stores because it offered customers a selection of 8,000 VHS tapes with the help of a modern, computerized check-out process, while other, smaller rental stores could only offer a couple hundred movies.
One year later, Cook expanded Blockbuster by opening three more stores.
At the time, rental stores, like Blockbuster, were the only way people could watch movies that had left theaters without buying the VHS tapes themselves.
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In 1987, three major investors took Blockbuster to the next level.
They invested $18.5 million in Blockbuster, according to Quartz. Later that year, Cook left the company, as the headquarters moved to Fort Lauderdale, Florida.
Under new management, the company bought up local video stores and opened new ones under the Blockbuster branding.
In 1988, Blockbuster became the leading video-store chain in the US with 800 stores.
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In the '90s, Blockbuster hit a major milestone when it opened its 1,000th store.
In 1992, the company also expanded overseas when it bought out video-rental chain Ritz in the UK. At this time, there were 2,800 Blockbuster stores.
In 1994, Viacom bought the video-rental company for $8.4 billion.
Five years later, Viacom took Blockbuster public, as the number of stores reached 6,000 globally.
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But trouble was on the horizon in 1997, as Blockbuster's future competitor, Netflix, was founded.
Blockbuster was known for charging customers a fee for every day they were late returning a movie rental. In fact, Blockbuster said it made $800 million in late fees, or 16% of its revenue, Quartz reported. This frustrated many customers, including Netflix founder Reed Hastings.
Hastings said he founded Netflix because he did not want to pay the $40 in fines he'd racked up at Blockbuster. In its early stages, Hastings' company, which had no late fees, would send DVDs straight to your house for a flat monthly rate.
In 2000, Blockbuster made the first mistake that would mark its demise: The company decided not to buy Netflix.
Blockbuster considered buying the popular Netflix service for $50 million, but the company decided to not make the purchase. Netflix went on to become even more popular and more profitable than Blockbuster.
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In 2002, Blockbuster's other big competitor, Redbox, launched.
Redbox's addition to the market reinforced the idea that people wanted quicker rental options with no late fees, so Blockbuster had to make a change.
Despite the rise of Netflix and Redbox, Blockbuster was at its peak in 2004.
That year, Blockbuster had 9,000 stores globally, Insider reported, and it earned $5.9 billion in revenue.
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But the company started making major changes in the early 2000s that would ultimately lead to its downfall.
In 2004, Viacom parted ways with Blockbuster. That same year, the company launched Blockbuster Online, but it was already years behind Netflix.
At the same time, Blockbuster decided to end late fees. It was estimated that it would cost the company $200 million to stop collecting late fees and another $200 million to start the new venture, Blockbuster Online, according to a Harvard Business Review article by former CEO John Antioco.
In the following years, Blockbuster's market value dwindled, hinting at its bleak future.
From 2003 to 2005, the company lost 75% of its market value, Forbes reported.
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In 2010, the rental company filed for bankruptcy after Netflix's popularity continued to grow.
In an attempt to wipe out $1 billion of debt, Blockbuster filed for bankruptcy, and the company was delisted from the NYSE.
The following year, Dish Network bought the company out of bankruptcy for $320 million in hopes of keeping 600 stores open.
However, Dish Network announced in 2013 that it would close the remaining Blockbuster stores.
At the time, there were only 300 Blockbuster stores still in operation, Insider reported.
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Today, the Blockbuster franchise has dwindled to just one store. So, where is the last Blockbuster? It's in Bend, Oregon.
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.
The standalone Blockbuster says it's still in operation because of its loyal customer base, citing the fact that the store has 4,000 accounts and signs up new customers each day. The store also said a large number of tourists visit the store to reminisce about the former rental company.
In 2020, the lone store opened its doors for overnight guests by partnering with Airbnb. Since then, it's also been the subject of a documentary called "The Last Blockbuster."
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Netflix, now in the business of making original shows, released a comedy series in 2022 set in a Blockbuster store
More than two decades after Blockbuster said "no" to acquiring the Netflix, you can watch the streaming service's original comedy series about the employees working in the world's last Blockbuster.
Netflix's "Blockbuster" takes place in a fictional version of the chain's only remaining store. The cast, led by Randall Park and Melissa Fumero, fumbles their way through keeping the location open.
The series hit Netflix last November, but it wasn't a hit with viewers: Just one month later, Variety reported that Netflix canceled the series.
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The Bend store drummed up interest during this year's Super Bowl with a homemade ad it released on social media during the game.
The Bend, Oregon Blockbuster couldn't afford the millions of dollars that a real Super Bowl ad would have cost. Instead, it posted its own homemade spot to Instagram and YouTube during this year's halftime show, the Los Angeles Times reported last month.
It features a co*ckroach scurrying into the store in a post-apocalyptic world. "We'll still be here," a voice says as the camera focuses on the entrance to the store.
The ad worked, according to the Times: Sales both online and in-store were up sharply in the days after it was posted, store employees said.
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A cryptic message on Blockbuster's website has some fans guessing about a new move from the defunct brand
Fans of Blockbuster spotted a recent change to blockbuster.com. Whoever manages the website added "We are working on rewinding your movie" below the company's logo. Insider's review of past versions of the website using the Wayback Machine internet archive suggests that the change was made sometime last summer.
The revision, plus some tweets from the official Blockbuster Twitter account, caused some fans of the brand to speculate that it was planning a comeback, Hot Hardware reported this month. The company did not respond to Insider's request for comment on its website and tweets.
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Netflix announces its final red envelope DVDs will be shipped out in September of this year
Netflix is also getting out of the DVD-rental business. It announced it would end its DVD-rental services on September 29, 2023, according to an official Twitter account dedicated to the DVD-side of the business.
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