Blockbuster LLC, formerly known as Blockbuster Video, was an American-based provider of home video and video game rental services. Services were offered primarily at
video rental shop
A video rental shop/store is a physical retail business that rents home videos such as movies, prerecorded TV shows, video game discs and other media content. Typically, a rental shop conducts business with customers under conditions and terms a ...
s, but later alternatives included
DVD-by-mail,
streaming
Streaming media is multimedia that is delivered and consumed in a continuous manner from a source, with little or no intermediate storage in network elements. ''Streaming'' refers to the delivery method of content, rather than the content it ...
,
video on demand
Video on demand (VOD) is a media distribution system that allows users to access videos without a traditional video playback device and the constraints of a typical static broadcasting schedule. In the 20th century, broadcasting in the form of o ...
, and cinema theater. Previously operated by Blockbuster Entertainment, Inc.,
the company expanded internationally throughout the 1990s. At its peak in 2004, Blockbuster consisted of 9,094 stores and employed approximately 84,300 people: 58,500 in the United States and 25,800 in other countries.
Poor leadership and the impact of the
Great Recession
The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
were major factors leading to Blockbuster's decline, as was the growing competition from
Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
's mail-order service,
video on demand
Video on demand (VOD) is a media distribution system that allows users to access videos without a traditional video playback device and the constraints of a typical static broadcasting schedule. In the 20th century, broadcasting in the form of o ...
, and
Redbox automated kiosks. Significant loss of revenue occurred during the late 2000s, and the company filed for
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
protection in 2010. The following year, its remaining 1,700 stores were bought by satellite television provider
Dish Network
DISH Network Corporation (DISH, an acronym for DIgital Sky Highway) is an American television provider and the owner of the direct-broadcast satellite provider Dish, commonly known as Dish Network, and the over-the-top IPTV service, Sling TV. A ...
,
and by 2014, the last 300 company-owned stores were closed. Although corporate support for the brand ended, Dish retained a small number of franchise agreements, enabling some privately owned franchises to remain open. Following a series of further closures in 2019, only
one franchised store remains open, located in
Bend, Oregon
Bend is a city in and the county seat of Deschutes County, Oregon, United States. It is the principal city of the Bend Metropolitan Statistical Area. Bend is Central Oregon's largest city, with a population of 99,178 at the time of the 2020 U.S ...
, United States.
History
1985–1996: David Cook era and early growth
![2008-09-24 Blockbuster in Durham](https://upload.wikimedia.org/wikipedia/commons/7/74/2008-09-24_Blockbuster_in_Durham.jpg)
Blockbuster's beginnings can be traced back to another company, Cook Data Services, founded by David Cook in 1978.
The company's primary goal was to supply software services to the oil and gas industries throughout
Texas
Texas (, ; Spanish language, Spanish: ''Texas'', ''Tejas'') is a state in the South Central United States, South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2 ...
, but it was very unsuccessful.
Sandy Cook, David's wife, wanted to get into the video business, and her husband would soon study the industry and future prospects. Using profit he made from the sale of David P. Cook & Associates, the subsidiary of his company, he decided to buy into a video store franchise in Dallas known as Video Works. When Video Works would not allow him to decorate the interior of his store with a blue-and-yellow design, he departed the franchise and opened the first Blockbuster Video in 1985 under his own company Blockbuster Video Inc. When he realized the potential in video rentals, Cook abandoned the oil industry and began franchising the Blockbuster store.
The first Blockbuster store opened on October 19, 1985, in
Dallas
Dallas () is the List of municipalities in Texas, third largest city in Texas and the largest city in the Dallas–Fort Worth metroplex, the List of metropolitan statistical areas, fourth-largest metropolitan area in the United States at 7.5 ...
, Texas, with an inventory of 8,000 VHS and 2,000 Beta tapes. The chain's name is derived from the term ''blockbuster'', a Hollywood term for a successful film, or in literature terminology, a best-selling novel. Cook's experience with managing huge databases proved helpful in driving innovation within the industry.
[ Following early success from the company's first stores, Cook built a $6-million warehouse in Garland, Texas, to help sustain and support future growth that allowed new stores to open quickly.][ Blockbuster would often custom-tailor a store's inventory to its neighborhood, based on local demographics.][
In 1987, ]Waste Management
Waste management or waste disposal includes the processes and actions required to manage waste from its inception to its final disposal.
This includes the collection, transport, treatment and disposal of waste, together with monitoring ...
co-founder Wayne Huizenga
Harry Wayne Huizenga Sr. (; December 29, 1937 – March 22, 2018) was an American businessman, entrepreneur, and philanthropist. He founded AutoNation and Waste Management Inc., and was the owner or co-owner of Blockbuster Video, the Miami ...
, who originally had reservations about entering the video rental industry, agreed to acquire several Blockbuster stores. At that time, there were 19 stores, attracting Huizenga's associate John Melk's attention due to its efficiency, family-friendly no porn image and business model. Huizenga and Melk utilized techniques from their waste business and Ray Kroc's model of expansion to rapidly expand Blockbuster, and soon they were opening a new store every 24 hours. They took over many of the existing Blockbuster franchise stores, and Huizenga spent much of the late 1980s acquiring several of Blockbuster's rivals, including Major Video. In 1989, Nintendo
is a Japanese Multinational corporation, multinational video game company headquartered in Kyoto, Japan. It develops video games and video game consoles.
Nintendo was founded in 1889 as by craftsman Fusajiro Yamauchi and originally produce ...
attempted to halt Blockbuster's ability to rent video games, filing multiple lawsuits and lobbying the U.S. Congress to ban the practice. Nintendo ultimately lost the battle, which paved the way for future video game rental.
In 1990, Blockbuster bought mid-Atlantic rival Erol's Erol's can refer to any of three companies, all founded by Erol Onaran, a Turkish immigrant to Virginia.
Erol's Inc.
Erol's Inc. was a video rental and electronic sales and repair company founded in 1963, which included video rental in 1980. By 19 ...
which had more than 250 stores. In 1992, Blockbuster acquired the Sound Warehouse and Music Plus music retail chains and created Blockbuster Music. In October 1993, Blockbuster took a controlling interest in Spelling Entertainment Group, a media company run by television producer Aaron Spelling
Aaron Spelling (April 22, 1923 June 23, 2006) was an American film and television producer and occasional actor. His productions included the TV series ''Family'' (1976–1980), '' Charlie's Angels'' (1976–1981), ''The Love Boat'' (1977–1986 ...
. Blockbuster purchased Super Club Retail Entertainment Corp. on November 22, 1993, from Philips Electronics, N.V. for 5.2 million shares of Blockbuster stock. This brought approximately 270 Record Bar
The Record Bar is a former U.S. retail music/entertainment store chain founded in Durham, North Carolina. The company eventually grew from a single location to 180 stores. One of the largest music retailing chains, it was located primarily in the s ...
, Tracks, Turtles and Rhythm and Views music stores and approximately 160 video retail superstores into the corporation. It also owned 35% of Republic Pictures
Republic Pictures Corporation (currently held under Melange Pictures, LLC) was an American motion picture production-distribution corporation in operation from 1935 to 1967, that was based in Los Angeles. It had studio facilities in Studio City an ...
; that company merged with Spelling in April 1994.
Blockbuster became a multibillion-dollar company, but Huizenga was worried about how new technology could threaten their business, such as video on demand
Video on demand (VOD) is a media distribution system that allows users to access videos without a traditional video playback device and the constraints of a typical static broadcasting schedule. In the 20th century, broadcasting in the form of o ...
and the growth of cable television. In 1991, just three days after Time Warner had announced it would upgrade its cable system, Blockbuster's shares dropped more than 10 percent. In 1993, he made an attempt to expand into other areas by investing in Viacom Viacom, an abbreviation of Video and Audio Communications, may refer to:
* Viacom (1952–2006), a former American media conglomerate
* Viacom (2005–2019), a former company spun off from the original Viacom
* Viacom18, a joint venture between Par ...
. Huizenga also considered buying a cable company, but this was unknown territory for Blockbuster and he decided not to take the risk. He also had the idea of a 2,500-acre Blockbuster sports and amusement park in Florida, something Blockbuster was still considering as late as August 1994. Unable to come up with a proper solution about how to face the growing threats to the traditional videostore, he made the decision to sell Blockbuster to Viacom and pull out. Viacom acquired Blockbuster in 1994 for $8.4 billion to help finance its bid for Paramount
Paramount (from the word ''paramount'' meaning "above all others") may refer to:
Entertainment and music companies
* Paramount Global, also known simply as Paramount, an American mass media company formerly known as ViacomCBS. The following busin ...
in the bidding war with QVC Network Inc. Blockbuster's stock trade had been dropping steadily the months before the merger, with a small rise after the deal was announced, and by the latter part of the decade, its worth was estimated to have fallen to just $4.6 billion.
The Blockbuster Block Party concept was test-marketed in Albuquerque, New Mexico
Albuquerque ( ; ), ; kee, Arawageeki; tow, Vakêêke; zun, Alo:ke:k'ya; apj, Gołgéeki'yé. abbreviated ABQ, is the most populous city in the U.S. state of New Mexico. Its nicknames, The Duke City and Burque, both reference its founding in ...
, and Indianapolis, Indiana
Indianapolis (), colloquially known as Indy, is the state capital and most populous city of the U.S. state of Indiana and the seat of Marion County. According to the U.S. Census Bureau, the consolidated population of Indianapolis and Mari ...
, in 1994. It was an "entertainment complex" aimed at adults, containing eight themed areas housing a restaurant, games, laser tag arena, and motion simulator rides, and was housed in a windowless building the size of a city block.
During the 1990s Blockbuster expanded in the United Kingdom, purchasing that country's Ritz Video chain. The stores were rebranded to Blockbuster.
The original Blockbuster company, Blockbuster Video Inc., was merged into the parent company Blockbuster Entertainment Inc. which had earlier replaced the Blockbuster Entertainment Company. In 1996, Blockbuster Entertainment Inc. merged into a new Blockbuster Entertainment Corporation and the retail stores, then called Blockbuster Video, were renamed Blockbuster. The logo changed slightly, but retained the ITC Machine font. In November 1996 Blockbuster confirmed that it was moving its headquarters from Fort Lauderdale, Florida
Fort Lauderdale () is a coastal city located in the U.S. state of Florida, north of Miami along the Atlantic Ocean. It is the county seat of and largest city in Broward County with a population of 182,760 at the 2020 census, making it the tenth ...
, to the Renaissance Tower in downtown Dallas
Downtown Dallas is the central business district (CBD) of Dallas, Dallas, Texas, United States, located in the geographic center of the city. It is the second-largest business district in the state of Texas. The area termed "Downtown" has tradit ...
. Most of the workers at the Florida headquarters did not want to relocate, so Blockbuster planned to hire around 500 to 600 new employees for its Dallas headquarters. The company had offered various relocation packages to all of its Fort Lauderdale staff. The second Blockbuster Entertainment Corporation was later merged into Blockbuster, Inc.
1997–2006: John Antioco era, Netflix turndown, and financial peak
In June 1997, Taco Bell
Taco Bell is an American-based chain of fast food restaurants founded in 1962 by Glen Bell (1923–2010) in Downey, California. Taco Bell is a subsidiary of Yum! Brands, Inc. The restaurants serve a variety of Mexican-inspired foods, includi ...
president John Antioco
John Antioco is an American businessman, known for being the former CEO of Blockbuster Video who missed an opportunity to purchase Netflix before it became a multi-billion dollar streaming platform. He is now the chairman of the board of directo ...
resigned from the company to become CEO of Blockbuster. Also that year, Warner Bros.
Warner Bros. Entertainment Inc. (commonly known as Warner Bros. or abbreviated as WB) is an American film and entertainment studio headquartered at the Warner Bros. Studios complex in Burbank, California, and a subsidiary of Warner Bros. Di ...
offered Antioco an exclusive rental deal, seeing as DVDs were emerging as the new home video medium. Blockbuster was to have rights to rent new DVD releases for a period of time before they went on sale to the general public. The studio was to receive 40% of rental revenues in return, which was the same deal already in place for VHS rentals. Blockbuster turned the offer down, and the studio responded by lowering its DVD wholesale price in order to compete with the rental industry. Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
seized the opportunity and in a few years surpassed Blockbuster as the studios' single largest source of revenue. Other mass retailers soon followed suit. Many began selling DVDs below wholesale price in hopes of selling more items with better profit margins as a result of the additional foot traffic in their stores. Unable to match prices, Blockbuster's business model was severely affected.
In 1998, Blockbuster created DEJ Productions
DEJ Productions was an American film studio founded in 1998 by Dean Wilson, Ed Stead and John Antioco.
The studio distributed 225 films in just eight years, including the Academy Award-winning '' Monster'' starring Charlize Theron and the mult ...
, which acquired 225 films primarily to provide exclusive content to its Blockbuster stores prior to being sold off to First Look Studios in 2005. During that same year, Blockbuster bought the Irish video rental store Xtra-vision
Xtra-vision was an online video, film and music store in the Republic of Ireland and Northern Ireland operated by Hilco Ireland.
The company original was Ireland's largest chain of DVR/DVD/Blu-ray rental stores and entertainment retailing com ...
, with over 200 stores in Ireland and the UK. In 2009. Blockbuster sold off its Irish operations to Birchall Investments, with the few Xtra-vision stores in the UK being rebranded as Blockbuster.
In late 1998, Blockbuster launched a loyalty program called Blockbuster Rewards that allowed customers to earn free rentals, including one older title each month from the category of Blockbuster Favorites. After the 1998 test launch, the chain went nationwide with the program in 1999.
In August the same year, Viacom sold the Blockbuster Music chain to Wherehouse Entertainment
Wherehouse Entertainment, also known as Wherehouse Music and The Wherehouse, was an American retail music franchise.
History
In 1983, Wherehouse Entertainment Inc, renamed from Integrity Entertainment Corp, went public with a public offering o ...
, which was subsequently purchased by Trans World Entertainment
Kaspien Holdings, Inc. (formerly Trans World Entertainment) is an American company that provides software and services for ecommerce. Kaspien Holdings operates on Amazon in the United States, Canada, United Kingdom, Spain, France, Italy, Germany ...
in 2003.
In mid-2000, the company partnered with Enron
Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
in an attempt to create a video-on-demand service. The agreement was supposed to last for 20 years; however, Enron terminated the deal in March 2001 over fears that Blockbuster would not be able to provide sufficient films for the service ( Enron also filed for bankruptcy that year). Also in 2000, Blockbuster turned down a chance to purchase the fledgling Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
for $50 million.
In 2002, Blockbuster acquired Movie Trading Company, a Dallas chain that buys, sells, and trades movies and games, to study potential business models for DVD and game trading. Also that year, it acquired Gamestation
Gamestation was a chain of retail shops in the United Kingdom selling used and new video games, and was the second largest specialist video game retailer in the United Kingdom until it was acquired by Game in May 2007, a group which owns many ...
, a 64-store UK computer and console games retailer chain, and purchased DVD Rental Central for $1 million, an Arizona father-and-son online DVD-rental company with about ten thousand subscribers. DVD Rental Central would eventually become Blockbuster Online.
On or around October 14, 2004, Blockbuster was spun-off from Viacom. Online DVD subscriptions were introduced on Blockbuster.com, also known as Blockbuster Online. Blockbuster also rolled out its "Game Rush" store-in-store concept to approximately 450 domestic company-operated stores. Blockbuster began game and DVD trading in selected U.S. stores.
At its peak in 2004, Blockbuster had more than 9,000 stores worldwide.[ In December 2004, Blockbuster announced its intention to pursue a hostile ]takeover
In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to t ...
of Hollywood Video, its major U.S. competitor. After several extensions of the tender offer, Blockbuster withdrew due to FTC opposition. To counter the Blockbuster offer, Hollywood Video agreed to a buyout in January 2005 by a smaller competitor, the Dothan, Alabama
Dothan () is a city in Dale, Henry, and Houston counties and the Houston county seat in the U.S. state of Alabama. It is Alabama's eighth-largest city, with a population of 71,072 at the 2020 census. It is near the state's southeastern corner, ...
-based Movie Gallery. Since then, Movie Gallery has filed for bankruptcy twice and its entire chain of stores has been liquidated.
In May 2005, financier Carl Icahn waged a successful proxy fight
A proxy fight, proxy contest or proxy battle (sometimes even called a proxy war) is an unfriendly contest for the control over an organization. The event usually occurs when a corporation's stockholders develop opposition to some aspect of the corp ...
to add himself and two other members to the board. Icahn accused Blockbuster of overpaying chairman and CEO John F. Antioco, who had served in that capacity since 1997, receiving $51.6 million in compensation for 2004. Icahn was also at odds with Antioco on how to revive profit at Blockbuster. Antioco scrapped late fees in January, started an internet service, and decided to keep the company independent, while Icahn wanted to sell out to a private equity
In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...
firm. Also in 2005, Blockbuster began a campaign promoting its "No more late fees" policy. The campaign proved controversial, with Associated Press
The Associated Press (AP) is an American non-profit news agency headquartered in New York City. Founded in 1846, it operates as a cooperative, unincorporated association. It produces news reports that are distributed to its members, U.S. newspa ...
reporting that the new policy actually charged users the full price of the movie or game after eight days which they could cancel by returning the product in question and paying a fee. More than 40 states filed suit against the company for false advertising. Blockbuster later settled the suit by agreeing to refunds, as well as promising to better explain the policy.
Vintage Stock acquired the Movie Trading Company name from Blockbuster in 2006, and continues to use the name for Dallas-area stores.
2007–2011: James Keyes era, financial decline, and bankruptcy
A billion-dollar campaign called "Total Access" was introduced in 2007 as a strategy against Netflix. Through Blockbuster Online, customers could rent a DVD online and receive a new movie for free when they returned it to a Blockbuster store. While it was a major success every free movie cost the company two dollars, but the hope was that it would attract enough new subscribers to cover the loss. Netflix felt threatened, and Netflix CEO Reed Hastings approached Antioco with a suggestion to buy Blockbuster's online business. In return, a new system would be introduced where customers could return their movies to a Blockbuster store. Before the deal could be realized, board member Carl Icahn intervened, refusing to let the company lose more money through Total Access. Antioco was pushed out in July and replaced with James Keyes, who rejected Hastings' proposal, raised the price of online DVD rentals and put an end to the free movie deal. As a consequence, Blockbuster Online's previously massive growth quickly stopped. Antioco's departure reportedly also involved continued controversy over his compensation. He left with a $24.7 million severance package.
On June 19, 2007, after a pilot program launched in late 2006, Blockbuster announced that it had chosen Blu-ray
The Blu-ray Disc (BD), often known simply as Blu-ray, is a digital optical disc data storage format. It was invented and developed in 2005 and released on June 20, 2006 worldwide. It is designed to supersede the DVD format, and capable of sto ...
over HD DVD format to rent in a majority of its stores. In the pilot program, Blockbuster offered selected titles for rental and sale in 250 stores. Blockbuster stocked Blu-ray titles in almost 5,000 stores across the United States, Canada, the United Kingdom, Mexico, and Australia.
On July 2, 2007, the company named James W. Keyes
James W. Keyes is currently the chairman of Wild Oats Marketing LLC. Previously, Keyes served as chief executive officer of 7-Eleven, Inc., and chairman and CEO of Blockbuster, Inc.
Education
Keyes graduated cum laude and Phi Beta Kappa with a ...
, former president and CEO of 7-Eleven
7-Eleven, Inc., stylized as 7-ELEVE, is a multinational chain of retail convenience stores, headquartered in Dallas, Texas. The chain was founded in 1927 as an ice house storefront in Dallas. It was named Tote'm Stores between 1928 and 1946. A ...
, as the new chairman and CEO. He introduced a new business strategy that included enhancements to existing stores. The following month in August, Blockbuster acquired Movielink
Movielink was a web-based video on demand (VOD) and electronic sell-through (EST) service offering movies, television shows, and other videos for rental or purchase. Movielink drew its content offerings from the libraries of Paramount Pictures, P ...
for $6.6 million, forecasting a shift to streaming video. Movielink was an online video service that allowed customers to download movie rentals from a library of over 6,000 films, created in 2002 by five major studios including Warner Bros, MGM Studios, Paramount Pictures, Sony Pictures, and Universal Studios. The move gave Blockbuster the opportunity to move away from the unprofitable Total Access (DVD-by-mail) service in favor of online streaming. Despite growing competition from Netflix and Redbox, the company downplayed the threat, choosing instead to focus on Apple and Walmart as their primary competition.
On September 14, 2007, Blockbuster GB Ltd bought a number of retail stores from ChoicesUK plc. ChoicesUK is an AIM-listed multi-channel distributor and retailer of DVDs, computer games, and CDs. The sale secured employment for approximately 450 employees across 59 stores in the UK. As part of the transaction, Blockbuster GB rebranded the stores as Blockbuster.
On February 17, 2008, Blockbuster proposed a buyout of struggling Circuit City
Circuit City is an American consumer electronics retail company, which was founded in 1949 by Samuel Wurtzel as the Wards Company, operated stores across the United States, and pioneered the electronics superstore format in the 1970s. After m ...
. However, after a due diligence
Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or contract with another party or an act with a certain standard of care.
It can be a l ...
review of Circuit City's financial books, Blockbuster withdrew its offer in July 2008. Analysts were not favorable to the proposed deal, viewing it as a desperate effort to save two struggling retailers rather than a bold turnaround initiative. Subsequently, Circuit City filed for bankruptcy on November 10, 2008, and, after liquidating all of its stores, ceased operations on March 8, 2009.
At the beginning of 2010, Blockbuster had over 6,500 stores, of which 4,000 were in the U.S.— a number that fell to 3,425 in late October the same year. In the United States it planned to close between 810 and 960 retail stores, and instead launch as many as 10,000 "Blockbuster Express" video rental kiosks by the middle of 2010. It has been claimed that more than 43 million U.S. households had Blockbuster memberships.
On February 10, 2010, Blockbuster announced that it would cease all its operations in Portugal, closing down 17 outlets and leaving over 100 workers unemployed. Blockbuster representatives in Portugal blamed internet piracy
Online piracy or software piracy is the practice of downloading and distributing copyrighted works digitally without permission, such as music or software. The principle behind piracy has predated the creation of the Internet, but its online popul ...
and the lack of government response to it as the key factors to the company's failure in the country.
In March 2010, Blockbuster began "Additional Daily Rates", or "ADRs", for rentals not returned by their due date in the United States, having already used this procedure in other countries such as the UK for many years. An ADR was charged for each day a member kept the rental beyond the rental terms. On March 12, 2010, PricewaterhouseCoopers
PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounting ...
, Blockbuster's independent registered public accounting firm, issued its audit opinion disclosing substantial doubt about Blockbuster's ability to continue as a going concern. This report was included in Blockbusters's 10-K SEC filing. On March 17, 2010, Blockbuster issued a bankruptcy warning after continued drops in revenue threatened its ability to service its nearly $1 billion debt load. By April 1, 2010, Carl Icahn had resigned from Blockbuster's board of directors and sold nearly all his remaining Blockbuster stock. Blockbuster paired up with Time Warner
Warner Media, LLC ( traded as WarnerMedia) was an American multinational mass media and entertainment conglomerate. It was headquartered at the 30 Hudson Yards complex in New York City, United States.
It was originally established in 1972 by ...
to have Warner Bros.
Warner Bros. Entertainment Inc. (commonly known as Warner Bros. or abbreviated as WB) is an American film and entertainment studio headquartered at the Warner Bros. Studios complex in Burbank, California, and a subsidiary of Warner Bros. Di ...
movies made available in Blockbuster stores on the DVD release date and not be subject to a four-week delay. Similar agreements were also made with Universal
Universal is the adjective for universe.
Universal may also refer to:
Companies
* NBCUniversal, a media and entertainment company
** Universal Animation Studios, an American Animation studio, and a subsidiary of NBCUniversal
** Universal TV, a t ...
and 20th Century Fox
20th Century Studios, Inc. (previously known as 20th Century Fox) is an American film production company headquartered at the Fox Studio Lot in the Century City area of Los Angeles. As of 2019, it serves as a film production arm of Walt Dis ...
.
The liquidation of Movie Gallery began in May 2010, eliminating Blockbuster's primary competitor. During the same month a dissident shareholder, Gregory S. Meyer, in an effort to be elected to Blockbuster's board of directors, engaged in a proxy battle
A proxy fight, proxy contest or proxy battle (sometimes even called a proxy war) is an unfriendly contest for the control over an organization. The event usually occurs when a corporation's stockholders develop opposition to some aspect of the corp ...
with Blockbuster's board, alleging that the board had been responsible for significant destruction of value to shareholders. Meyer was elected to the board at Blockbuster's shareholder meeting in Dallas on June 24, 2010.
On July 1, 2010, the company was delisted from the New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...
after its shareholders failed to pass a reverse stock split
In finance, a reverse stock split or reverse split is a process by which shares of corporate stock are effectively merged to form a smaller number of proportionally more valuable shares.
A reverse stock split is also called a stock merge. The "r ...
plan aimed at heading off involuntary delisting because of the stock's trading at well below $1 per share. The stock was then traded on the OTCBB
The OTC (Over-The-Counter) Bulletin Board or OTCBB was a United States quotation medium operated by the Financial Industry Regulatory Authority (FINRA) for its subscribing members. FINRA closed the OTCBB on November 8, 2021.
The board was used for ...
(over-the-counter bulletin board).
Blockbuster was unable to make a $42.4 million interest payment to bondholders and was given until August 13, 2010, to pay off the debt. The company hired Jeff Stegenga to be its chief restructuring officer (CRO) in an effort to satisfy bondholder demands and recapitalize the company. After failing to pay on August 13, bondholders gave Blockbuster until September 30, 2010.
On August 26, 2010, news media reported that Blockbuster was planning to file a pre-packaged Chapter 11 bankruptcy in mid-September. In light of this news, the company's chief financial officer (CFO), Tom Casey, resigned on September 11. He was replaced by Dennis McGill, formerly CFO of Safety-Kleen Systems, Inc. On September 23, 2010, Blockbuster filed for Chapter 11 bankruptcy protection due to challenging losses, $900 million in debt, and strong competition from Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
, Redbox, and video on-demand services. Movie Gallery/Hollywood Video had filed for Chapter 7 bankruptcy liquidation earlier in 2010 for similar reasons.
At the time of its Chapter 11 filing, Blockbuster said it would keep its 3,300 stores open;[ however, that December it announced it would close an additional 182 stores by the end of April 2011 in attempts to emerge from bankruptcy. It was reported in February 2011 that Blockbuster and its creditors had not come up with a Chapter 11 exit plan and that the company would be sold for $300 million or more, along with taking over debts and leases.] Blockbuster admitted that it might not be able to meet financial obligations required under its Chapter 11 filing, a circumstance which could mandate conversion of the bankruptcy filing to Chapter 7 (liquidation). On March 1, 2011, the U.S. Department of Justice
The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...
filed a claim disclosing that Blockbuster did not have the funds to continue reorganizing and should liquidate.
On March 28, 2011, South Korean telecommunications company SK Telecom
SK Telecom Co., Ltd. ( or ) is a South Korean wireless telecommunications operator and former film distributor and is part of the SK Group, one of the country's largest chaebols. It leads the local market with 50.5 percent share as of 2008. S ...
made a surprise bid to buy Blockbuster. Dish Network
DISH Network Corporation (DISH, an acronym for DIgital Sky Highway) is an American television provider and the owner of the direct-broadcast satellite provider Dish, commonly known as Dish Network, and the over-the-top IPTV service, Sling TV. A ...
had also expressed interest in bidding, as did Carl Icahn, despite calling Blockbuster "the worst investment I ever made". Dish eventually won the auction on April 6, 2011, agreeing to buy Blockbuster for $320 million and the assumption of $87 million in liabilities and other obligations. On April 19, 2011, it was announced that Dish would keep only 500 Blockbuster stores open. The acquisition was completed on April 26, 2011. In April 2011, Dish Network told the U.S. Bankruptcy Court that it needed more time to negotiate with landlords in an effort to keep more than 600 Blockbuster stores open.
In April 2011, Blockbuster's landlords objected to its assumption of leases that it sought to assign to soon-to-be-owner Dish Network
DISH Network Corporation (DISH, an acronym for DIgital Sky Highway) is an American television provider and the owner of the direct-broadcast satellite provider Dish, commonly known as Dish Network, and the over-the-top IPTV service, Sling TV. A ...
Corp., claiming that they did not have adequate assurance that the new owner would honor those leases. Blockbuster signed a deal with ITV Studios Global Entertainment to launch ITV Programmes released on DVDs, Blu-rays, etc. On May 6, 2011, Keyes resigned as Blockbuster's CEO.
2011–2015: Michael Kelly era
Keyes was replaced by Michael Kelly under the new title of Blockbuster's president. On August 31, 2011, the liquidators announced the closure of the remaining 253 Canadian stores and shutting of the entire Canadian unit. In September 2011, it was announced that Blockbuster and Dish Network would launch a new service called Blockbuster Movie Pass that would compete with Netflix. For US$10 per month the members would have access to both a streaming service and movies and games-by-mail. The package was only available for subscribers of Dish Network's pay-TV service, and it eventually folded.
On January 13, 2012, Dish CEO Joe Clayton announced that while Dish had planned to keep 90% of the stores in operation, meaning around 15,000 employees would remain employed, because of market factors "there are ones that aren't going to make it. We will close unprofitable stores. We will close additional stores." Clayton did not say when these additional closings would happen and only remarked that some stores were unprofitable. The Dish chief would not say which stores the company was planning to close, but that each potential closing was to be assessed on a "case by case basis".
On October 4, 2012, Dish Network announced that it was scrapping plans to make Blockbuster into a Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
competitor. On January 16, 2013, Blockbuster UK entered into administration and Deloitte
Deloitte Touche Tohmatsu Limited (), commonly referred to as Deloitte, is an international professional services network headquartered in London, England. Deloitte is the largest professional services network by revenue and number of profession ...
was appointed to run the business while trying to find a buyer while some of the stores remained open. Between November 6, 2013, and January 12, 2014, all 300 remaining corporate-owned Blockbuster stores in the U.S. were closed and the DVD-by-mail program was shut down. The Blockbuster official website identified 51 franchise locations remaining in operation in the U.S. in 2014. Dish maintained its video streaming services, Blockbuster on Demand and Blockbuster@Home, until they were replaced by a new subscription service in April 2015 called "DISH Movie Pack". In May 2015, Michael Kelly retired from Dish.
Blockbuster's decline was attributed to poor leadership according to others in the industry. Previous franchise owner Ken Tisher said in 2015, "Blockbuster, if it isn't already, is going to go into the Harvard Business Review for how not to run a business, or how to run a business into the ground." Keith Hoogland, owner of Family Video
Family Video Movie Club Inc. was an American brick and mortar video rental chain serving the United States and Canada. The family-owned company was headquartered in Glenview, Illinois.
History
In 1946, Clarence Hoogland founded Midstates Ap ...
, attributed poor decision-making as a primary reason the company did not survive. Jonathan Salem Baskin, a former Blockbuster marketing communications executive, stated, "Digital would have changed Blockbuster's business, for sure, but it wasn't its killer. That credit belongs to Blockbuster itself." Commentators view Blockbuster as a main example of failing to change with the times.
2015–present: Post-Kelly era and the Last Blockbuster
Although Blockbuster stores could remain open by paying a licensing fee to Dish, there was no longer a corporate entity to provide supplies of branded products, forcing franchisees to design and produce their own. Additional store closures would continue. By January 2018, the company's website listed nine remaining franchise-owned stores in the U.S., including six in Alaska, two in Oregon, and one in Texas. Eight of those nine had closed by August 2018, leaving only one store in Bend, Oregon
Bend is a city in and the county seat of Deschutes County, Oregon, United States. It is the principal city of the Bend Metropolitan Statistical Area. Bend is Central Oregon's largest city, with a population of 99,178 at the time of the 2020 U.S ...
.[ In March 2019, the last remaining store outside of the United States, located in Morley, Western Australia, closed its doors.] The Bend location became the last remaining Blockbuster in the world; it houses Russell Crowe
Russell Ira Crowe (born 7 April 1964) is an actor. He was born in New Zealand, spent ten years of his childhood in Australia, and moved there permanently at age twenty one. He came to international attention for his role as Roman General Maxi ...
film props which John Oliver
John William Oliver (born 23 April 1977) is a British-American comedian, writer, producer, political commentator, actor, and television host. Oliver started his career as a stand-up comedian in the United Kingdom. He came to wider attention ...
had donated to an Alaska store. In August 2020, the location was listed as an Airbnb rental for a 1990s-themed sleepover on three separate nights in September; each were limited to guests from the area in light of the COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...
.
The entity that operated Blockbuster prior to the sale to Dish remains nominally active under the name BB Liquidating Inc., and trades as a penny stock. However, it no longer has any assets or ties to the Blockbuster brand or its remaining franchise location. In activity related to the GameStop short squeeze of January 2021, the BB Liquidating stock surged, despite there being "no value for the common shareholders in the bankruptcy liquidation process, even under the most optimistic of scenarios."
On July 22, 2022, the Blockbuster Twitter
Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...
account tweeted for the first time in nearly two years, with the message: "We're back from the grave...". Social media users speculated if the company was entering the NFT
A non-fungible token (NFT) is a unique digital identifier that cannot be copied, substituted, or subdivided, that is recorded in a blockchain, and that is used to certify authenticity and ownership. The ownership of an NFT is recorded in the ...
business based on a report from December of 2021. However, Zoe Guy of ''Vulture
A vulture is a bird of prey that scavenges on carrion. There are 23 extant species of vulture (including Condors). Old World vultures include 16 living species native to Europe, Africa, and Asia; New World vultures are restricted to North and ...
'' dismissed the theory, noting that the parent company of Blockbuster, Dish Network, refused to sell the company's rights to BlockbusterDAO earlier in July.
On September 21, 2022, the Blockbuster Twitter
Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...
account revealed the Blockbuster World Video Game Championship 3. The event was held during the Portland Retro Gaming Expo 2022.
Business model
The standard business model for video rental stores had traditionally been to pay a large flat fee per video, approximately $65, and offer unlimited rentals for the lifetime of the medium itself. Sumner Redstone, whose Viacom conglomerate then owned Blockbuster, personally pioneered a new revenue-sharing arrangement for video in the mid-1980s. Blockbuster obtained videos for little cost and kept 60% of the rental fee, paying the other 40% to the studio, and reporting rental information through the global media measurement and research company Rentrak
Rentrak Corporation is a global media measurement and research company serving the entertainment industry. Rentrak is headquartered in Portland, Oregon, United States, with additional offices in the United States and around the world.
In February ...
. In addition to benefiting from a lower initial price, Blockbuster also capitalized on the fact that movies were generally not available for purchase at affordable price points during initial release periods. Thus customers had a choice to rent, wait, or buy the film on tape at the much higher manufacturer's suggested retail price
The list price, also known as the manufacturer's suggested retail price (MSRP), or the recommended retail price (RRP), or the suggested retail price (SRP) of a product is the price at which its manufacturer notionally recommends that a retailer ...
targeted at other rental chains and film enthusiasts, which at that time ranged between $70–$100 per title.
Quantity and selection of titles
Blockbuster stores followed a strategy of emphasizing access to the most popular new releases, obtaining early access and stocking many copies of the new-release titles, with a relatively narrower range of selections than traditional independent video stores. Much of the shelf space in the stores was devoted to popular titles that were placed relatively sparsely on the shelves with the entire front cover visible, so customers could browse casually and quickly, rather than having a more diverse selection with fewer copies of each title. Blockbuster sometimes contracted with studios to obtain earlier access to new titles than other companies could achieve. Examples of such contracts were those in which Blockbuster became the exclusive rental chain for new releases from WWE (or World Wrestling Federation), Funimation, Rhino
A rhinoceros (; ; ), commonly abbreviated to rhino, is a member of any of the five extant species (or numerous extinct species) of odd-toed ungulates in the family Rhinocerotidae. (It can also refer to a member of any of the extinct species o ...
, Paramount
Paramount (from the word ''paramount'' meaning "above all others") may refer to:
Entertainment and music companies
* Paramount Global, also known simply as Paramount, an American mass media company formerly known as ViacomCBS. The following busin ...
, DreamWorks DreamWorks may refer to:
* DreamWorks Pictures, an American film production company of Amblin
** DreamWorks Television, an American television production company and division of the film studio
** DreamWorks Records, an American record label and f ...
, DWA, Universal
Universal is the adjective for universe.
Universal may also refer to:
Companies
* NBCUniversal, a media and entertainment company
** Universal Animation Studios, an American Animation studio, and a subsidiary of NBCUniversal
** Universal TV, a t ...
, Lionsgate, Summit
A summit is a point on a surface that is higher in elevation than all points immediately adjacent to it. The topography, topographic terms acme, apex, peak (mountain peak), and zenith are synonymous.
The term (mountain top) is generally used ...
, Anchor Bay, Manga
Manga (Japanese: 漫画 ) are comics or graphic novels originating from Japan. Most manga conform to a style developed in Japan in the late 19th century, and the form has a long prehistory in earlier Japanese art. The term ''manga'' is u ...
, The Weinstein Company
The Weinstein Company (usually credited or abbreviated as TWC) was an American independent film studio, founded in New York City by Bob and Harvey Weinstein in March 2005. TWC was one of the largest mini-major film studios in North America prior ...
, Dimension
In physics and mathematics, the dimension of a Space (mathematics), mathematical space (or object) is informally defined as the minimum number of coordinates needed to specify any Point (geometry), point within it. Thus, a Line (geometry), lin ...
, Miramax
Miramax, LLC, also known as Miramax Films, is an American film and television production and distribution company founded on December 19, 1979, by brothers Harvey and Bob Weinstein, and based in Los Angeles, California.
It was initially a leadi ...
, Hollywood
Hollywood usually refers to:
* Hollywood, Los Angeles, a neighborhood in California
* Hollywood, a metonym for the cinema of the United States
Hollywood may also refer to:
Places United States
* Hollywood District (disambiguation)
* Hollywood, ...
, Touchstone
Touchstone may refer to:
* Touchstone (assaying tool), a stone used to identify precious metals
* Touchstone (metaphor), a means of assaying relative merits of a concept
Entertainment
* ''Touchstone'' (album), a 1982 album by Chick Corea
* T ...
, Disney
The Walt Disney Company, commonly known as Disney (), is an American multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios complex in Burbank, California. Disney was originally founded on October ...
, Buena Vista Buena Vista, meaning "good view" in Spanish, may refer to:
Places Canada
*Bonavista, Newfoundland and Labrador, with the name being originally derived from “Buena Vista”
*Buena Vista, Saskatchewan
*Buena Vista, Saskatoon, a neighborhood in ...
, 20th Century Fox
20th Century Studios, Inc. (previously known as 20th Century Fox) is an American film production company headquartered at the Fox Studio Lot in the Century City area of Los Angeles. As of 2019, it serves as a film production arm of Walt Dis ...
, MGM
Metro-Goldwyn-Mayer Studios Inc., also known as Metro-Goldwyn-Mayer Pictures and abbreviated as MGM, is an American film, television production, distribution and media company owned by Amazon through MGM Holdings, founded on April 17, 1924 a ...
/ UA, Orion, Sony
, commonly stylized as SONY, is a Japanese multinational conglomerate corporation headquartered in Minato, Tokyo, Japan. As a major technology company, it operates as one of the world's largest manufacturers of consumer and professional ...
, Columbia
Columbia may refer to:
* Columbia (personification), the historical female national personification of the United States, and a poetic name for America
Places North America Natural features
* Columbia Plateau, a geologic and geographic region in ...
, Tristar, Image
An image is a visual representation of something. It can be two-dimensional, three-dimensional, or somehow otherwise feed into the visual system to convey information. An image can be an artifact, such as a photograph or other two-dimensiona ...
, Shout! Factory
Shout! Factory is an American home video and music company founded in 2002 as Retropolis Entertainment. Its video releases include previously released feature films, classic and contemporary television series, animation, live music, and comedy ...
, Warner Bros.
Warner Bros. Entertainment Inc. (commonly known as Warner Bros. or abbreviated as WB) is an American film and entertainment studio headquartered at the Warner Bros. Studios complex in Burbank, California, and a subsidiary of Warner Bros. Di ...
, HBO
Home Box Office (HBO) is an American premium television network, which is the flagship property of namesake parent subsidiary Home Box Office, Inc., itself a unit owned by Warner Bros. Discovery. The overall Home Box Office business unit is ba ...
, New Line Cinema
New Line Cinema is an American film production studio owned by Warner Bros. Discovery and is a film label of Warner Bros. It was founded in 1967 by Robert Shaye as an independent film distribution company; later becoming a film studio after acq ...
and Allumination FilmWorks. As one commentator complained, "Blockbuster was once an unstoppable giant whose franchises swept across the country putting mom and pop video stores out of business left and right by offering a larger selection of new releases, pricing them at a lower point due to the volume they worked in... Gone were the fragmented, independently owned shops that were often unorganized treasure troves of VHS discoveries. In their place were walls of new releases: hundreds of copies of a small handful of films. Everyone watching the same thing, everyone developing the same limited set of expectations... They put focus entirely on what was new rather than on discovering film history ..."[
When a title was no longer a new release, each store would retain a few copies of it and typically sell off the rest as "previously viewed" for discounted prices. Older movies would be re-categorized as "Blockbuster Favorite" titles and placed in a different area of the store. Most Blockbuster locations also accepted trade-ins of used movies, TV shows, and games.
Since Blockbuster's founding in 1985, the chain refused to stock adult films in order to portray the brand as family-friendly.] However, the company did carry R-rated and unrated films.
Other ventures
Blockbuster Entertainment Awards
Blockbuster Entertainment Inc. ran an awards show annually from 1995 to 2001 called the '' Blockbuster Entertainment Awards''. In November 2001, Blockbuster announced that it would cancel the 2002 award show following concerns about viewership and celebrity attendance after the September 11 attacks
The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commercia ...
.
Blockbuster Express
Blockbuster Express was a movie-rental kiosk brand sublicensed for use by licensee NCR Corporation. In 2011, nearly 10,000 Blockbuster Express kiosks were in operation. Apart from the license to use the Blockbuster brand name, Blockbuster Express kiosks are unrelated to Blockbuster LLC, its stores, its DVD-by-mail service, or its online streaming service.
The names ''Blockbuster Express'' and ''Blockbuster Video Express'' had also been used for smaller Blockbuster retail stores in the United Kingdom.
GameRush
In 2004, Blockbuster opened store-within-a-store video game rental and sales stores called GameRush inside Blockbuster locations in limited markets. Blockbuster also acquired Rhino Video Games, a chain of video game stores in the Southwest, and renamed them Game Rush. These stores sold and bought DVDs, games, game consoles, and accessories. GameRush was positioned as a direct competitor to stores such as GameStop and Game Crazy. 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. In January 2007, Blockbuster sold Rhino Video Games to GameStop Corp. According to the Blockbuster Twitter account, GameRush was to be part of the "new Blockbuster" in 2016 and even had its own Twitter profile, however the GameRush Twitter account has not been active since January 2017.
Discovery Zone
In 1993, Blockbuster invested in the indoor kids' play restaurant Discovery Zone. In 1995, Blockbuster bought more stock to take control of the company. Discovery Zone abruptly closed half of its locations in 1999 and sold thirteen others to the parent company of Chuck E. Cheese's. The rest of the Discovery Zone locations closed in December 2001. The chain was revived as a single location in Cincinnati, Cincinnati, Ohio, on February 7, 2020. It remains in operation, but it is not owned by Blockbuster.
International operations
Australia
In Australia, the first Blockbuster store was opened in 1991 in Melbourne. In 1992, the Virgin Group and Blockbuster Inc entered into a joint venture to set up Australia's first Virgin Megastores in Sydney, Melbourne, and Adelaide. This lasted until Virgin sold its interest in the six stores to Blockbuster, which promptly rebranded them in 1993 as Blockbuster Music. In 1994, Australian store numbers rose to 54 with the acquisition of Major Video and Focus chains in both Victoria (Australia), Victoria and South Australia. In 1995, the growth continued with the opening of the 100th video store in the country. By the end of 1998, Blockbuster Australia opened over 125 stores. In July 1998, Blockbuster Australia launched into franchising with the conversion of the former Video Flicks franchise group in Queensland, and the former Movieland group in Western Australia six months later. Also in 1998, the company sold its last two Australian Blockbuster Music stores in Pitt Street, Sydney, and Chapel Street, Melbourne to Brazin Limited, which incorporated them under its Sanity Entertainment brand. Throughout 1999 and 2000, Blockbuster Australia quickly expanded its franchise store network through the conversion of smaller groups and the granting of individual franchises. Before 2005, this was done through the acquisition of the Movies Plus Group and the conversion of some individual Movies 4U and Movieland outlets.
In February 2007, Blockbuster sold its entire Australian store network to Video Ezy. At the time, Blockbuster Australia comprised 370 outlets nationwide—29 owned by the company and 341 owned by franchisees. Video Ezy had 518 Australian outlets, all of them being owned by franchisees, pushing the combined group's market share to 40% of the country's video rental sector. Video Ezy committed to the master franchise agreement with Blockbuster for 10 years operating the brand with the possibility of renewal for a further 10 years after that. As a consequence of the deal, the company changed its name from Video Ezy to Franchise Entertainment Group (FEG).
In October 2010, FEG transferred control of the Video Ezy Australia and Blockbuster Australia online businesses to its newly acquired and reorganized company, Elan Media Partners, leaving FEG to manage the franchise relationships with individual Video Ezy and Blockbuster outlets. However, since the two brands came together, the network has shrunk, reflected in Video Ezy and Blockbuster franchises closing 270 stores across Australia in the four years to August 2011.
Additional store closings would go on for several years, until all the stores in Australia had closed, although vending kiosks with the Blockbuster logo were still in operation until early 2021. Australia's last Blockbuster store, in Morley, Western Australia, was closed at the end of March 2019.[
]
Brazil
Blockbuster was the largest video rental chain in the country, but finances were not good enough due to high rental prices. Lojas Americanas, the largest Brazilian department store, acquired half of the shares and now it is named under "Americanas Express Blockbuster". The store layout was similar to a regular American store with a Game Rush, but instead of games it offers electronics goods like computers and DVD players, groceries like candies and microwave popcorn, and even toys from Mattel and Hasbro's board games. In January 2007, when Blockbuster had 127 stores across Brazil, it sold its Brazilian stake for $87.4 million and gave Lojas Americanas exclusive rights to the Blockbuster brand in the country for 20 years. The average store has an interior on about 400 m2, where 80-100 m2 is dedicated to movies.
Canada
In Canada, Blockbuster Canada (established in 1990) had operated independently, and it initially remained financially stable. It began a partnership with Wind Mobile in December 2009, selling mobile phones at all stores in cities where Wind's service was available. Phone sales began in Toronto and Calgary, later expanding to other cities with Wind coverage. Some stores even featured a full Wind "store-in-a-store" for postpaid activations and a larger selection of devices. However, on May 3, 2011, it was announced that the company had gone into receivership. On May 25, 2011, it was announced that 146 stores, accounting for approximately 35% of the company's stores in Canada, would be shut down effective June 18, 2011. On August 31, 2011, Blockbuster Canada announced that no buyer could be found for its remaining stores that were acceptable to the court-appointed bankruptcy receiver, and that it would wind down operations and close all stores by December 31, 2011. The company had acted as a guarantor towards Blockbuster's remaining debt.
Denmark
Blockbuster came to Denmark in 1996 with the acquisition of the 29 Christianshavn video stores. In 2009 they were on its peak with 72 stores across the country. Blockbuster Video Denmark sold the rights for the Blockbuster brand to the Danish telecommunications corporation TDC in 2013, excluding the 46 remaining brick and mortar stores which continued as RecycleIT A/S, diversifying in refurbishing and reselling consumer electronics in addition sale and rental of games and movies. The original goal was to rename all the stores before July 1, 2014, when TDC would get the exclusive rights to the brand name in Denmark, but only 12 of them had been renamed at the end of June and RecycleIT A/S filed for bankruptcy the same year. The 12 RecycleIT stores were bought by the company Blue City. The new owners planned to gradually phase out game and movie sales and rental within 2016, but due to the fast changes in the market it happened almost immediately after the takeover, and seven of the stores, therefore, closed in 2015. In 2017, the five remaining ones had started to make some profit, and focus exclusively on second-hand consumer electronics
However, the Blockbuster On Demand service is still active in Nordic Countries, offering both unlimited streaming and 48-hour rental of films online. Several Smart TVs have the Blockbuster app pre-installed out-of-the-box, and it is available on a variety of streaming devices such as Google's Chromecast. The rights to the Blockbuster brand are now in hands of Nuuday.
Germany
Blockbuster opened 20 stores in Berlin and Munich and announced plans to open 250 more. The chain presented itself as family-friendly by not renting pornographic films. However, that decision adversely affected the profitability of the stores. Blockbuster left the German market in 1997.
Hong Kong
In 1998, after the closure of KPS Video Express, Blockbuster saw an opportunity to enter into the Hong Kong market, and entered into negotiations with KPS's receivers Ernst & Young to buy the KPS operations. Blockbuster re-opened 15 of 38 former KPS stores by February 16, 1998,
and re-employed 145 former KPS staff. KPS members were given special offers to join Blockbuster, but the video pre-paid coupon system was not retained.
Blockbuster pulled out of the market in 2004 after high operating costs and losses to copyright infringement.
Ireland
In March 2010, Blockbuster announced that it intended to sell all operations in Europe. The company once had an Irish subsidiary, Xtravision, which did not operate under the Blockbuster brand name. Blockbuster sold Xtravision at a loss in August 2009 to Birchhall Investments Limited. All remaining stores were closed in 2016, leaving only its online business and vending machines.
Israel
In the late 2000s at its peak, Blockbuster Israel had 40 branches and more than 260 automated video rentals. In December 2011, Blockbuster closed off its last branch store, and had only 80 automated video rentals left.
Japan
In March 1991, Den Fujita, Fujita Den Trading (which was the master franchise owner of McDonald's in Japan) and Blockbuster Inc entered into a joint venture to establish Japan's first Blockbuster Video stores. By October 1992, Fujita and Blockbuster opened 15 stores in the country – four of them next to McDonald's outlets and most being located in the Greater Tokyo Area, greater Tokyo area. Unlike Blockbuster's U.S. stores, each Japanese outlet only occupied about half the floor space at 5,000 square feet due to the country's more limited available real estate. By June 1996, 32 stores were in operation with a public aim for 150 by 1998. Blockbuster Japan faced heavy competition from Osaka-based video rental chain, Tsutaya (video store), Tsutaya, with its 817 outlets, but the company saw opportunity in the population having high VCR ownership levels (at around 75%), low satellite TV penetration (at around 27%), and well-ordered store layouts (unique for most local video stores). However, Blockbuster's business strategy of "wholesome home entertainment" saw it refuse to stock adult entertainment, which accounted for 35% of the Japanese video market, or the extreme horror films that were also popular. All of which meant Blockbuster was unable to fit adequately into the Japanese market, and was immediately put at a disadvantage compared to competitors that had no such ethical stance. Blockbuster handed its remaining shares over to Fujita Den Trading in 1999, and exited the Japanese market.
Mexico
In September 2015, all remaining Blockbuster retail stores (263 in total) in Mexico had been converted to "The B Store", and the floor space dedicated to video rentals reduced from 70% to 20%, the remaining space being used for general technology and electronics sales. The re-branding occurred with the owners not renewing their license with Blockbuster and the imminent expiry of the existing license. All remaining B-stores closed by July 2016.
New Zealand
The chain also operated for many years in New Zealand, but over the years lost customers to other retailers like United Video and Video Ezy, as well as the rise of streaming services. While the store in Bend, Oregon was generally regarded as the last Blockbuster store, there was one in Dargaville, north of Auckland, that managed to stay open until finally closing at the end of January 2020.
Norway
In December 2002 the first Blockbuster store opened in Norway, and was followed by another store some months later in 2003, both located in Oslo. The hope was to acquire an already existing video chain. When that failed, it was made an attempt to build a Norwegian blockbuster chain from scratch. But both stores closed in the spring of 2004.
Peru
Blockbuster opened its first store in Peru in 1995, and by 2002 it had ten stores in Lima. However, in 2006, Blockbuster announced that it plans to shut down its stores in Peru due to poor revenues, which it blamed on the effect of movie copyright infringement, piracy. The last store in Peru was closed on January 3, 2007. The company had already closed down its stores in Ecuador, Portugal and Costa Rica. El Salvador followed in 2010, and Argentina in 2011.
United Kingdom
In 1989, the company entered the United Kingdom via its purchase of the 875-store Ritz Video chain for $135 million, from parent company Citivision. Ritz Video was Europe's largest rental chain, with a 20% share of the United Kingdom video market, and annual sales of about $150 million. The first re-branded Blockbuster outlet opened on Walworth Road, South London, the same year. By November 1991, Blockbuster UK converted 30 stores to its brand.
Blockbuster UK operated trade functions in all their stores, buying and selling pre-owned DVDs, console games, and gaming accessories. Stores offered either store credit or cash for trade-ins, and would price-match with competitors. At its height in 2002, Blockbuster UK operated out of over 800 stores.
In early 2013, the company had 528 locations in the United Kingdom. On January 16, 2013, Blockbuster placed its United Kingdom subsidiaries in Administration (law), administration, putting over 4,000 jobs at risk. Non-UK stores were unaffected by the administration, and continued to trade as normal. On February 1, 2013, a large number of Blockbuster stores in the UK were closed, and the UK business was purchased out of administration by restructuring firm Gordon Brothers Group, Gordon Brothers Europe on March 23, 2013.
Blockbuster UK then traded as TS Operations, with only 264 branches retained. On October 29, 2013, Blockbuster UK announced it was to go into administration for a second time. On November 14, 2013, 72 store closures were announced, with another 62 made on December 5. A week later, with no success in finding a buyer, it was announced by Moorfields Corporate Recovery that all remaining stores in the country would cease operation on December 16, 2013, with stock to be cleared the day before this.
In September 2018, to coincide with the digital release of ''Deadpool 2'', a pop-up retail store in the style of an original 1989 Blockbuster outlet was opened for two days in Shoreditch in East London. The store gave away 1,989 copies of the film in reference to Blockbuster's entry year into the UK market.
Online rentals
Brazil
In January 2006, Blockbuster Brazil also introduced an online rental service now featuring both DVD and Blu-ray plans. There were four Block plans available with prices ranging from R$34.90 to R$79.90. The 3-disc plan with unlimited exchanges was R$49.90/month. Unlike the U.S. service, there was no in-store disk exchange.
Movielink acquisition
On August 8, 2007, Blockbuster announced that it had reached an agreement to purchase Movielink
Movielink was a web-based video on demand (VOD) and electronic sell-through (EST) service offering movies, television shows, and other videos for rental or purchase. Movielink drew its content offerings from the libraries of Paramount Pictures, P ...
. According to the 8-K filing by Blockbuster, the total purchase price was $6.6 million.
The Nordics
Blockbuster streaming service is still active in Nordic Countries, offering both unlimited streaming and 48-hour rental of films online. Several Smart TVs have the Blockbuster app pre-installed out-of-the-box, and it is available on a variety of streaming devices such as Google's Chromecast. The rights to the Blockbuster brand are now in hands of Nuuday.
United Kingdom
Rentals cost £3.50 to £4.50 and lasted for five nights, usually from Monday to Friday due to the postal service. Late fees of £0.70 to £0.90 per disc applied if a disc was not returned on time.
In May 2004, Blockbuster also introduced an online subscription service. The unlimited three-disc plan cost £14.99/month but did not allow in-store exchange, contrary to the U.S. service. Partial support for in-store exchange was added in April 2005 with the launch of an "OnlineXtra" service. This service cost £2 per month, required an online subscription to a disc plan, and added two extra discs sent by mail. The OnlineXtra discs could be exchanged in store, but the non-OnlineXtra discs could not. The program was discontinued in 2006 with no Grandfather clause, grandfathering, but an in-store-only variant of it resurfaced in early 2008. A "Click & Collect" service launched in September 2010 allowed the reservation of Blockbuster movies in store, but the store's regular rental fees applied until the company added in-store exchanges in May 2012. Support for game reservations was added in November 2011.
In 2008, Blockbuster UK's website underwent an overhaul, with an online store; a retail store stock checker; improved search functionality; and a critically acclaimed layout. In-store pickup and exclusive titled were added in 2009. Some of the titles which had an exclusivity period at Blockbuster include Gran Torino, Changeling, Taken, and Knowing. Additionally, online rental downloads of Universal Pictures in the United Kingdom remains exclusive to Blockbuster. This provides an advantage to the rental company compared to its competitors HMV, Play, and LoveFilm.
In January 2010, Blockbuster UK launched an online blog. Improved search algorithms, product pages, and social network links were added to the site in April 2010. Blockbuster UK aired a monthly ''BB Insider'' online video show from May 2010 to January 2011 and launched an iPhone App in September 2010. Throughout the year 2011, Blockbuster UK announced several price cuts along with a new Blockbuster loyalty card program.
These price drops were followed by a price drop of the Blockbuster UK online pay per rent service. Although some Blockbuster UK advertisements claim that the company no longer charges late fees, the fine print and/or voiceover clarifies that rentals will be charged an extra pound for every additional night. A "Top Ticket" feature was added in April 2011, allowing monthly subscription customers to rent an additional movie at no extra charge and to receive it before other movies they request. Support for online sales of used movie and game discs was added in July 2011. The Blockbuster UK website was enhanced in September 2011. During the following month, a new TV section was added to the website.
3D Blu-rays were added to Blockbuster UK in February 2012. In May 2012, Blockbuster UK partnered with IGN to launch a new Blockbuster VIP Gamer loyalty program.
On January 16, 2013, Blockbuster UK entered Administration (law), administration, appointing Deloitte
Deloitte Touche Tohmatsu Limited (), commonly referred to as Deloitte, is an international professional services network headquartered in London, England. Deloitte is the largest professional services network by revenue and number of profession ...
as company administrators, casting doubt over the future of their 528 stores in the country. An announcement was then made by Deloitte that 160 UK stores would close.
On February 13, 2013, Deloitte announced a further 164 store closures, leaving 204 stores trading in the UK. The business was sold to restructuring firm the Gordon Brothers Group on March 23, 2013. On October 29, 2013, Gordon Brothers filed notice of intention to appoint an administrator. On November 28, 2013, Blockbuster UK officially entered administration for the second time, and by December 2013, all stores were closed, as no buyer for the chain was found.
United States
In 1997, Enron Corporation had entered the broadband market, constructing and purchasing thousands of miles of fiber optic cables throughout the United States. In 2001, Enron and Blockbuster Inc. attempted to create a 20-year deal to stream Video on demand, movies on demand over Enron's fiber optic network. However, the "heavily promoted" deal fell through, with Enron's shares dropping following the announcement.
On August 11, 2004, Blockbuster introduced a DVD-by-mail service in the US to compete with the established market leader, Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
.
Blockbuster's US online operation started with around 10 warehouses; further expansions every year brought that number to 41, plus more than 1400 stores in the Blockbuster Online network. Most Blockbuster independent franchises did not honor the Total Access program. The company had 1.5 million subscribers at the end of the third quarter of 2006. Blockbuster's move to follow the business pattern with its online rentals as was established by Netflix prompted Netflix to sue Blockbuster for patent infringement. Blockbuster counter sued with a counterclaim alleging deceptive practices with its patent which it alleged was designed to maintain an illegal monopoly. The suits were eventually settled, and while the terms were not disclosed it was later reported that Netflix recorded a settlement payment from Blockbuster of $4.1 million in the second quarter of 2007.
Blockbuster offered several online movie rental plans. In some cities customers could add games to their movie rental queue as if they were included in their plan, but game rentals resulted in a separate additional fee which was not displayed or charged until the end of the billing cycle. Until July 26, 2007, Blockbuster offered and advertised unlimited free in-store exchanges of online rentals with all plans. Since then there were several changes back and forth with regard to this policy; in March 2010 customers were allowed a limited number of in-store exchanges.
At the end of 2006, Blockbuster Total Access had 2.2 million customers, exceeding their original goal of 2 million, according to its website. After an aggressive media campaign that accounted for much of Blockbuster's $46.4 million net loss in the first quarter of 2007, the Total Access subscriber base surpassed 3 million customers in total, marking the company's highest subscriber growth quarter ever. By 2009, however, the company was declining to provide figures when asked by ''The Wall Street Journal''.
On January 5, 2007, Southern Stores Inc., one of Blockbuster's largest franchise operators in the United States, filed a lawsuit in federal court alleging that, by introducing Blockbuster Online and Blockbuster Total Access, the rental chain has undercut the group's franchise agreement.
On August 6, 2010, Blockbuster By Mail subscribers gained access to Blockbuster's library of console games, in addition to movies and television shows.
On March 31, 2012, Blockbuster On Demand removed support from set-top box media players, including Vudu, Western Digital Media Center, WDTV, and Roku. Supported devices now only included computers, Blu-ray players, select television sets, and cellular phones.
On February 26, 2013, Roku, Inc. announced that Blockbuster On Demand was being launched on Roku's channel store. Supported devices now included computers, Blu-ray players, select television sets, cellular phones, and the Roku set-top box.
In November 2013, Dish Network said its DVD-by-mail service would shut down by mid-December.
Advertising
Super Bowl
One of Blockbuster's most well-known advertising campaigns was launched in 2002 during Super Bowl XXXVI. It starred the voices of James Woods and Jim Belushi as Carl and Ray, a rabbit and a guinea pig in a pet shop located across the road from a Blockbuster store. The first campaign ended in 2003. The Carl and Ray campaign started again in 2007 starting with a commercial in the first quarter of Super Bowl XLI.
Misleading advertising
In 2005, Blockbuster launched a marketing campaign describing changes in its late fees policy and offering "No Late Fees" on rentals. The program sparked investigations and charges of misrepresentation in 48 states and the District of Columbia: state attorneys general including Bill Lockyer of California, Greg Abbott of Texas, and Eliot Spitzer of New York argued that customers were being automatically charged the full purchase price of late rentals and a restocking fee for rentals returned after 30 days. In a settlement, Blockbuster agreed to reimburse the states the cost of their investigation, clarify communication to customers on the terms of the program, and offer reimbursement to customers charged fees prior to the clarification. New Jersey filed a separate lawsuit and was not a party to the settlement.
The 2005 controversy came after a related lawsuit settled in 2002 in Texas. That lawsuit, alleging exorbitant late fees, led the company to pay $9.25 million in attorney fees and offer $450 million in late fee refund coupons (which were rent-one get-one-free coupons, and thus required the customer to make an initial expenditure). The company estimated that the coupons would ultimately cost about $45 million depending on the redemption rate; an attorney for the plaintiffs estimated the final cost at closer to $100 million at a redemption rate of about 20% (calculated based on a similar case in Michigan).
Such corrections were also sent to international stores such as those in Canada to prevent further lawsuits.
Blockbuster reintroduced late fees in the United States in 2010 under the name of "Additional Daily Rates". With this pricing scheme, rentals were once again limited to a certain number of days and accrued pay-per-day rates after the days allocated are exceeded.
Senior management history
* Michael J. Kelly, Michael Kelly, president: 2011–2015
* Dennis McGill, executive vice president and chief financial officer: 2010–2013
* Kevin Lewis, senior vice president and chief marketing officer: 2008–2012
* John Antioco, John F. Antioco, CEO: 1997–2007
* James W. Keyes
James W. Keyes is currently the chairman of Wild Oats Marketing LLC. Previously, Keyes served as chief executive officer of 7-Eleven, Inc., and chairman and CEO of Blockbuster, Inc.
Education
Keyes graduated cum laude and Phi Beta Kappa with a ...
, CEO: 2007–2011
* Karen H. Jolles, chief marketing officer: 1993–1997
* Mark Allen Stuart, Vice President Studio Relations/Acquisition/Retail Strategy Officer: 1989–1993
See also
* Dish Network
DISH Network Corporation (DISH, an acronym for DIgital Sky Highway) is an American television provider and the owner of the direct-broadcast satellite provider Dish, commonly known as Dish Network, and the over-the-top IPTV service, Sling TV. A ...
* Family Video
Family Video Movie Club Inc. was an American brick and mortar video rental chain serving the United States and Canada. The family-owned company was headquartered in Glenview, Illinois.
History
In 1946, Clarence Hoogland founded Midstates Ap ...
* Gamerang
* Hollywood Video
* Movie Gallery
* Netflix
Netflix, Inc. is an American subscription video on-demand over-the-top streaming service and production company based in Los Gatos, California. Founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California, it offers a fil ...
* Retail apocalypse
* List of retailers affected by the retail apocalypse
References
Informational notes
Citations
External links
*
{{Authority control
Blockbuster LLC,
Franchises
Home video companies of the United States
Video rental services
Defunct retail companies of the United States
Defunct retail companies of Canada
Defunct companies based in Texas
Companies based in Dallas
American companies established in 1985
Canadian companies established in 1990
Retail companies established in 1985
Retail companies disestablished in 2014
2014 disestablishments in Canada
Companies formerly listed on the New York Stock Exchange
Companies that filed for Chapter 11 bankruptcy in 2010
Companies that have entered administration in the United Kingdom
Dish Network
Former Viacom subsidiaries
1994 mergers and acquisitions
2012 mergers and acquisitions