The Rise And Fall of Blockbuster

Throughout history, there have been companies that have completely changed the industry that they were competing in. However, one company dominated the industry they were in and left all competition in the dust. The company that I am referring to is Blockbuster.

The first Blockbuster store was opened in 1985 by a man called David Cook. David had previously provided computer software for gas and oil companies in Texas and had found some short-term success. However soon after making his company public the value of the business plummeted. Despite the struggles, David was facing with his business he still decided to remain vigilant and decided to spend some of the money he had made from his computer software company on a new company and this company was in the video rental business. David Cook opened the first-ever Blockbuster store in 1985 in Dallas, Texas. There were some immediate notable differences that made Blockbuster stand out firstly Blockbuster offered a selection of over 8000 VHS tapes which gave it a massive advantage against other video rental stores that could only offer a few selections at a time. David was smart with his approach and used his analytical experience to build his business from the ground up in a market where there were no major competitors as individuals or small families ran most video rental stores. David’s risk turned into a reward almost immediately with people immediately flocking to the store with David speaking to CNN in 2013 and stating “The first night we were so mobbed we had to lock the doors to prevent more people from coming in”

Though David started the company he is not the man that people know as the man who helped the company grow to the juggernaut of a company it once was. That man is called H. Wayne Huizenga. Before Huizenga had even invested a single dime into Blockbuster in 1987 he was already a millionaire thanks to his waste management company. Huizenga was persuaded by two friends to invest a serious amount of money into Blockbuster and that’s exactly what he did. In 1987 H. Wayne Huizenga, John Melk and Scott Beck invested 18.5 Million in exchange for 60 per cent of the company and later that year the original creator David Cook would sell his stake in the company for around $12 Million after a falling out with Huizenga about the direction of the company. After Cook sold his share. Huizenga and his partners shot Blockbuster to astronomical heights.

Blockbuster made more than all of its competitors combined in 1994 making $4 Billion a year; this was achieved by using a monopoly-style approach. Huizenga brought smaller independent video rental stores and brands. This took all competitors off the board and Blockbuster went from strength to strength thanks to its appealing logo, well-placed branding and appealing partnerships. However even though Blockbuster was one of the biggest companies in the world. Huizenga had his concerns, technology was advancing at such a quick rate Huizenga feared the impact cable television could have on his business Huizenga had planned many countermeasures. He had an interest in buying a television cable company and had other business expansions on the horizon. However, In 1994 Blockbuster was sold to Viacom for an eye-watering $8.4 Billion. At the time they didn’t know it but it was the beginning of the end

In just under 2 years under Viacom Blockbuster had lost half of its value. The rise of new technologies and the reluctance to move forward and adapt was the beginning of the end. Competition began to arise in the form of Netflix which was created in 1998 by Reed Hastings and Marc Randolph who had become sick of the late fees issued by Blockbuster. New Blockbuster boss John Antioco instead opted to focus on physical stores and rejected the opportunity to buy Netflix in 2000 for the price of just $50M as he was unconvinced that online businesses would be sustainable and thought that they were just a trend that would eventually crash. Antioco effectively laughed at Hastings’ $50M price tag and that was that. Blockbuster 2 years after having the opportunity to buy Netflix saw a deal fall apart with Enron that would see Blockbuster and Enron form a partnership for a video-on-demand service. However, this fell apart after Enron was unconvinced by Blockbuster's dedication to the service. This was another decision that led to the downfall as Netflix began to rival Blockbuster with its DVD-by-mail service and no late fees. This saw the kingdom that was Blockbuster begin to crumble.

Stores began to close and Blockbuster began to haemorrhage money while Netflix continued to go from strength to strength and gain more followers and more money. In 2009 Blockbuster reported losses of $518 Million. Now in 2023, only 1 Blockbuster remains in Bend, Oregon a sad reminder of a mighty kingdom that has fallen. Overall reluctance to adapt and change and poor business decisions caused the downfall of Blockbuster and the end of an era.